Statutory Profit Doesn't Reflect How Good PS Tec's (KOSDAQ:002230) Earnings Are

The subdued stock price reaction suggests that PS Tec. Co., Ltd.'s (KOSDAQ:002230) strong earnings didn't offer any surprises. Investors are probably missing some underlying factors which are encouraging for the future of the company.

How Do Unusual Items Influence Profit?

Importantly, our data indicates that PS Tec's profit was reduced by ₩5.3b, due to unusual items, over the last year. 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, after all, that's exactly what the accounting terminology implies. In the twelve months to December 2024, PS Tec had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker 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 PS Tec.

Our Take On PS Tec's Profit Performance

As we mentioned previously, the PS Tec's profit was hampered by unusual items in the last year. Based on this observation, we consider it possible that PS Tec's statutory profit actually understates its earnings potential! And the EPS is up 46% over the last twelve months. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. To that end, you should learn about the 3 warning signs we've spotted with PS Tec (including 1 which is a bit unpleasant).

Today we've zoomed in on a single data point to better understand the nature of PS Tec'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 with high insider ownership.

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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.