We Think NOROO PAINT & COATINGS' (KRX:090350) Robust Earnings Are Conservative

NOROO PAINT & COATINGS Co., Ltd. (KRX:090350) just reported healthy earnings but the stock price didn't move much. We think that investors have missed some encouraging factors underlying the profit figures.

Check out our latest analysis for NOROO PAINT & COATINGS

The Impact Of Unusual Items On Profit

Importantly, our data indicates that NOROO PAINT & COATINGS' profit was reduced by ₩6.4b, due to unusual items, over the last year. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect NOROO PAINT & COATINGS 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 NOROO PAINT & COATINGS.

Our Take On NOROO PAINT & COATINGS' Profit Performance

Because unusual items detracted from NOROO PAINT & COATINGS' 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 NOROO PAINT & COATINGS' statutory profit actually understates its earnings potential! Better yet, its EPS are growing strongly, which is nice to see. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. While it's very important to consider the profit and loss statement, you can also learn a lot about a company by looking at its balance sheet. If you're interested we have a graphic representation of NOROO PAINT & COATINGS' balance sheet.

Today we've zoomed in on a single data point to better understand the nature of NOROO PAINT & COATINGS' 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.