HDC HOLDINGSLtd's (KRX:012630) Soft Earnings Are Actually Better Than They Appear

March 24, 2021
  •  Updated
November 26, 2022
Source: Shutterstock

Soft earnings didn't appear to concern HDC HOLDINGS CO.,Ltd's (KRX:012630) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

View our latest analysis for HDC HOLDINGSLtd

KOSE:A012630 Earnings and Revenue History March 24th 2021

The Impact Of Unusual Items On Profit

To properly understand HDC HOLDINGSLtd's profit results, we need to consider the ₩43b expense attributed 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 that's hardly a surprise given these line items are considered unusual. If HDC HOLDINGSLtd 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 HDC HOLDINGSLtd.

Our Take On HDC HOLDINGSLtd's Profit Performance

Unusual items (expenses) detracted from HDC HOLDINGSLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think HDC HOLDINGSLtd's earnings potential is at least as good as it seems, and maybe even better! Better yet, its EPS are growing strongly, which is nice to see. 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 HDC HOLDINGSLtd at this point in time. Every company has risks, and we've spotted 3 warning signs for HDC HOLDINGSLtd (of which 2 can't be ignored!) you should know about.

This note has only looked at a single factor that sheds light on the nature of HDC HOLDINGSLtd'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.

When trading HDC HOLDINGSLtd or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Valuation is complex, but we're helping make it simple.

Find out whether HDC HOLDINGSLtd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis