We Think Worldex Industry & Trading's (KOSDAQ:101160) Solid Earnings Are Understated

The stock was sluggish on the back of Worldex Industry & Trading Co., Ltd.'s (KOSDAQ:101160) recent earnings report. Along with the solid headline numbers, we think that investors have some reasons for optimism.

See our latest analysis for Worldex Industry & Trading

How Do Unusual Items Influence Profit?

For anyone who wants to understand Worldex Industry & Trading's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩7.2b 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. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Worldex Industry & Trading 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 Worldex Industry & Trading's Profit Performance

Because unusual items detracted from Worldex Industry & Trading's 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 Worldex Industry & Trading's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for Worldex Industry & Trading you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Worldex Industry & Trading's 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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