Stock Analysis

MobileleaderLtd's (KOSDAQ:100030) Solid Earnings May Rest On Weak Foundations

KOSDAQ:A100030
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Mobileleader Co.,Ltd.'s (KOSDAQ:100030) robust recent earnings didn't do much to move the stock. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for MobileleaderLtd

earnings-and-revenue-history
KOSDAQ:A100030 Earnings and Revenue History April 5th 2021

The Impact Of Unusual Items On Profit

To properly understand MobileleaderLtd's profit results, we need to consider the ₩2.4b gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. MobileleaderLtd had a rather significant contribution from unusual items relative to its profit to December 2020. 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 MobileleaderLtd.

Our Take On MobileleaderLtd's Profit Performance

As we discussed above, we think the significant positive unusual item makes MobileleaderLtd's earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that MobileleaderLtd's underlying earnings power is lower than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money last year. 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. If you want to do dive deeper into MobileleaderLtd, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with MobileleaderLtd, and understanding these should be part of your investment process.

This note has only looked at a single factor that sheds light on the nature of MobileleaderLtd'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. 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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