Weak Statutory Earnings May Not Tell The Whole Story For Hwang Kum Steel & Technology (KRX:032560)

The subdued market reaction suggests that Hwang Kum Steel & Technology Co., Ltd's (KRX:032560) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

Check out our latest analysis for Hwang Kum Steel & Technology

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Hwang Kum Steel & Technology's profit received a boost of ₩2.5b in unusual items, 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 analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. If Hwang Kum Steel & Technology doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Hwang Kum Steel & Technology.

Our Take On Hwang Kum Steel & Technology's Profit Performance

Arguably, Hwang Kum Steel & Technology's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Hwang Kum Steel & Technology's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 44% over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 3 warning signs for Hwang Kum Steel & Technology and we think they deserve your attention.

Today we've zoomed in on a single data point to better understand the nature of Hwang Kum Steel & Technology'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 that insiders are buying.

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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.