There May Be Reason For Hope In SERIM B&GLtd's (KOSDAQ:340440) Disappointing Earnings

Investors were disappointed with the weak earnings posted by SERIM B&G Co.,Ltd (KOSDAQ:340440 ). However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

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How Do Unusual Items Influence Profit?

Importantly, our data indicates that SERIM B&GLtd's profit was reduced by ₩785m, due to unusual items, over the last year. 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 SERIM B&GLtd 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 SERIM B&GLtd.

Our Take On SERIM B&GLtd's Profit Performance

Unusual items (expenses) detracted from SERIM B&GLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think SERIM B&GLtd's earnings potential is at least as good as it seems, and maybe even better! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So while earnings quality is important, it's equally important to consider the risks facing SERIM B&GLtd at this point in time. For example - SERIM B&GLtd has 4 warning signs we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of SERIM B&GLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.