HANDYSOFT's (KOSDAQ:220180) Shareholders May Want To Dig Deeper Than Statutory Profit

The recent earnings posted by HANDYSOFT, Inc. (KOSDAQ:220180) were solid, but the stock didn't move as much as we expected. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

See our latest analysis for HANDYSOFT

How Do Unusual Items Influence Profit?

For anyone who wants to understand HANDYSOFT's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩917m worth of 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that HANDYSOFT's positive unusual items were quite significant relative to its profit in the year to December 2023. 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 HANDYSOFT.

Our Take On HANDYSOFT's Profit Performance

As previously mentioned, HANDYSOFT's large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that HANDYSOFT's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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'd like to know more about HANDYSOFT as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that HANDYSOFT has 3 warning signs and it would be unwise to ignore these.

This note has only looked at a single factor that sheds light on the nature of HANDYSOFT's profit. But there are plenty of other ways to inform your opinion of a company. 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. 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.