Are CUCKOO Homesys' (KRX:284740) Statutory Earnings A Good Reflection Of Its Earnings Potential?

Many investors consider it preferable to invest in profitable companies over unprofitable ones, because profitability suggests a business is sustainable. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. Today we'll focus on whether this year's statutory profits are a good guide to understanding CUCKOO Homesys (KRX:284740).

We like the fact that CUCKOO Homesys made a profit of ₩76.9b on its revenue of ₩778.8b, in the last year.

View our latest analysis for CUCKOO Homesys

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. This article will discuss how unusual items have impacted CUCKOO Homesys' most recent profit results. 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.

The Impact Of Unusual Items On Profit

To properly understand CUCKOO Homesys' profit results, we need to consider the ₩16b expense attributed 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 that's hardly a surprise given these line items are considered unusual. If CUCKOO Homesys doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

Our Take On CUCKOO Homesys' Profit Performance

Because unusual items detracted from CUCKOO Homesys' 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 CUCKOO Homesys' statutory profit actually understates its earnings potential! And on top of that, its earnings per share increased by 52% in the last year. 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. If you'd like to know more about CUCKOO Homesys as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that CUCKOO Homesys has 1 warning sign and it would be unwise to ignore this.

This note has only looked at a single factor that sheds light on the nature of CUCKOO Homesys' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. 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. 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.
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