There May Be Reason For Hope In Daejung Chemicals & Metals' (KOSDAQ:120240) Disappointing Earnings

Soft earnings didn't appear to concern Daejung Chemicals & Metals Co., Ltd.'s (KOSDAQ:120240) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand Daejung Chemicals & Metals' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩1.8b due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Daejung Chemicals & Metals doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Daejung Chemicals & Metals.

Our Take On Daejung Chemicals & Metals' Profit Performance

Because unusual items detracted from Daejung Chemicals & Metals' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Daejung Chemicals & Metals' earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Daejung Chemicals & Metals as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Daejung Chemicals & Metals.

This note has only looked at a single factor that sheds light on the nature of Daejung Chemicals & Metals' profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.