Solid Earnings Reflect NPD's (KOSDAQ:198080) Strength As A Business

NPD Co., Ltd (KOSDAQ:198080) just reported healthy earnings but the stock price didn't move much. Investors are probably missing some underlying factors which are encouraging for the future of the company.

See our latest analysis for NPD

How Do Unusual Items Influence Profit?

For anyone who wants to understand NPD's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩2.6b due to unusual items. 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 that's hardly a surprise given these line items are considered unusual. If NPD doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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

Our Take On NPD's Profit Performance

Because unusual items detracted from NPD'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 NPD'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 year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into NPD, you'd also look into what risks it is currently facing. For example - NPD has 1 warning sign we think you should be aware of.

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