Weak Statutory Earnings May Not Tell The Whole Story For Jeju Semiconductor (KOSDAQ:080220)

Jeju Semiconductor Corp.'s (KOSDAQ:080220) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

See our latest analysis for Jeju Semiconductor

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Jeju Semiconductor's profit received a boost of ₩2.7b in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jeju Semiconductor.

Our Take On Jeju Semiconductor's Profit Performance

Arguably, Jeju Semiconductor's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Jeju Semiconductor's statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 38% 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. If you want to do dive deeper into Jeju Semiconductor, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Jeju Semiconductor has 1 warning sign and it would be unwise to ignore it.

This note has only looked at a single factor that sheds light on the nature of Jeju Semiconductor'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. 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.