ODTech's (KOSDAQ:080520) Earnings Are Of Questionable Quality

ODTech Co., Ltd. (KOSDAQ:080520) announced strong profits, but the stock was stagnant. We did some digging, and we found some concerning factors in the details.

See our latest analysis for ODTech

How Do Unusual Items Influence Profit?

For anyone who wants to understand ODTech's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩6.8b worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. We can see that ODTech's positive unusual items were quite significant relative to its profit in the year to December 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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

Our Take On ODTech's Profit Performance

As we discussed above, we think the significant positive unusual item makes ODTech's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that ODTech's underlying earnings power is lower than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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 want to do dive deeper into ODTech, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for ODTech you should know about.

Today we've zoomed in on a single data point to better understand the nature of ODTech'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 with significant insider holdings 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.