Does SUNIC SYSTEM's (KOSDAQ:171090) Statutory Profit Adequately Reflect Its Underlying Profit?

Statistically speaking, it is less risky to invest in profitable companies than in unprofitable ones. That said, the current statutory profit is not always a good guide to a company's underlying profitability. This article will consider whether SUNIC SYSTEM's (KOSDAQ:171090) statutory profits are a good guide to its underlying earnings.

While SUNIC SYSTEM was able to generate revenue of ₩78.8b in the last twelve months, we think its profit result of ₩7.82b was more important.

Check out our latest analysis for SUNIC SYSTEM

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will discuss how unusual items have impacted SUNIC SYSTEM's most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of SUNIC SYSTEM.

How Do Unusual Items Influence Profit?

To properly understand SUNIC SYSTEM's profit results, we need to consider the ₩3.2b expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. 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. If SUNIC SYSTEM 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 SUNIC SYSTEM's Profit Performance

Because unusual items detracted from SUNIC SYSTEM'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 SUNIC SYSTEM's statutory profit actually understates its earnings potential! And it's also positive that the company showed enough improvement to book a profit this year, after losing money last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 5 warning signs for SUNIC SYSTEM you should be mindful of and 1 of these bad boys is concerning.

Today we've zoomed in on a single data point to better understand the nature of SUNIC SYSTEM'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. 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. 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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