Nasmedia's (KOSDAQ:089600) Soft Earnings Don't Show The Whole Picture

Nasmedia Co., Ltd.'s (KOSDAQ:089600) earnings announcement last week didn't impress shareholders. Despite the soft profit numbers, our analysis has optimistic about the overall quality of the income statement.

Check out our latest analysis for Nasmedia

How Do Unusual Items Influence Profit?

For anyone who wants to understand Nasmedia's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩3.2b due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. 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 Nasmedia to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Nasmedia's Profit Performance

Because unusual items detracted from Nasmedia's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Nasmedia's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in 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'd like to know more about Nasmedia as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 2 warning signs for Nasmedia and you'll want to know about them.

Today we've zoomed in on a single data point to better understand the nature of Nasmedia's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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. 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.