Are Hyundai Bng Steel's (KRX:004560) Statutory Earnings A Good Guide To Its Underlying Profitability?

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. In this article, we'll look at how useful this year's statutory profit is, when analysing Hyundai Bng Steel (KRX:004560).

While Hyundai Bng Steel was able to generate revenue of ₩680.1b in the last twelve months, we think its profit result of ₩17.3b was more important. Below, you can see that both its revenue and its profit have fallen over the last three years.

Check out our latest analysis for Hyundai Bng Steel

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. This article will focus on the impact unusual items have had on Hyundai Bng Steel's statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Hyundai Bng Steel.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Hyundai Bng Steel's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩7.8b 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 Hyundai Bng Steel doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On Hyundai Bng Steel's Profit Performance

Because unusual items detracted from Hyundai Bng Steel's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Hyundai Bng Steel's statutory profit actually understates its earnings potential! And the EPS is up 9.4% over the last twelve months. 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. If you want to do dive deeper into Hyundai Bng Steel, you'd also look into what risks it is currently facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Hyundai Bng Steel.

This note has only looked at a single factor that sheds light on the nature of Hyundai Bng Steel's 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 that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. 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.
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