There Might Be More To Samhwa Paints Industrial's (KRX:000390) Story Than Just Weak Earnings

Shareholders didn't appear too concerned by Samhwa Paints Industrial Co., Ltd.'s (KRX:000390) weak earnings. Our analysis suggests that they may be missing some concerning details underlying the profit numbers.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, Samhwa Paints Industrial increased the number of shares on issue by 5.2% over the last twelve months by issuing new shares. Therefore, each share now receives a smaller portion of profit. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. You can see a chart of Samhwa Paints Industrial's EPS by clicking here.

A Look At The Impact Of Samhwa Paints Industrial's Dilution On Its Earnings Per Share (EPS)

Unfortunately, Samhwa Paints Industrial's profit is down 33% per year over three years. Even looking at the last year, profit was still down 41%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 44% in the same period. Therefore, the dilution is having a noteworthy influence on shareholder returns.

If Samhwa Paints Industrial's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Samhwa Paints Industrial.

The Impact Of Unusual Items On Profit

Finally, we should also consider the fact that unusual items boosted Samhwa Paints Industrial's net profit by ₩2.9b over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. We can see that Samhwa Paints Industrial's positive unusual items were quite significant relative to its profit in the year to September 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Our Take On Samhwa Paints Industrial's Profit Performance

In its last report Samhwa Paints Industrial benefitted from unusual items which boosted its profit, which could make the profit seem better than it really is on a sustainable basis. On top of that, the dilution means that its earnings per share performance is worse than its profit performance. Considering all this we'd argue Samhwa Paints Industrial's profits probably give an overly generous impression of its sustainable level of profitability. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, Samhwa Paints Industrial has 4 warning signs (and 1 which is significant) we think you should know about.

In this article we've looked at a number of factors that can impair the utility of profit numbers, and we've come away cautious. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.