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Impressive Earnings May Not Tell The Whole Story For KNJ (KOSDAQ:272110)
Investors were disappointed with KNJ Co., Ltd.'s (KOSDAQ:272110) earnings, despite the strong profit numbers. We think that the market might be paying attention to some underlying factors that they find to be concerning.
Check out our latest analysis for KNJ
The Impact Of Unusual Items On Profit
Importantly, our data indicates that KNJ's profit received a boost of ₩1.1b in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. If KNJ doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.
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 KNJ's Profit Performance
Arguably, KNJ's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that KNJ's true underlying earnings power is actually less than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate 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. So while earnings quality is important, it's equally important to consider the risks facing KNJ at this point in time. When we did our research, we found 2 warning signs for KNJ (1 is a bit unpleasant!) that we believe deserve your full attention.
This note has only looked at a single factor that sheds light on the nature of KNJ'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
Valuation is complex, but we're here to simplify it.
Discover if KNJ might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.
About KOSDAQ:A272110
KNJ
Manufactures and sells equipment and parts for display panels and semiconductors in Korea and internationally.
Solid track record with adequate balance sheet.