Some Investors May Be Willing To Look Past Osangjaiel's (KOSDAQ:053980) Soft Earnings

Shareholders appeared unconcerned with Osangjaiel Co., Ltd.'s (KOSDAQ:053980) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

See our latest analysis for Osangjaiel

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Osangjaiel's profit was reduced by ₩1.3b, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Osangjaiel to produce a higher profit next year, all else being equal.

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

Our Take On Osangjaiel's Profit Performance

Because unusual items detracted from Osangjaiel'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 Osangjaiel'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. 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. If you want to do dive deeper into Osangjaiel, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 2 warning signs for Osangjaiel you should know about.

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