Some Investors May Be Willing To Look Past Kukdong Oil & ChemicalsLtd's (KRX:014530) Soft Earnings

Soft earnings didn't appear to concern Kukdong Oil & Chemicals Co.,Ltd's (KRX:014530) 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?

To properly understand Kukdong Oil & ChemicalsLtd's profit results, we need to consider the ₩2.6b 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Kukdong Oil & ChemicalsLtd to produce a higher profit next year, all else being equal.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Kukdong Oil & ChemicalsLtd.

Our Take On Kukdong Oil & ChemicalsLtd's Profit Performance

Unusual items (expenses) detracted from Kukdong Oil & ChemicalsLtd's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Kukdong Oil & ChemicalsLtd's statutory profit actually understates its earnings potential! 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 6 warning signs for Kukdong Oil & ChemicalsLtd you should be mindful of and 3 of these are a bit unpleasant.

Today we've zoomed in on a single data point to better understand the nature of Kukdong Oil & ChemicalsLtd's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. 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.