We're Not So Sure You Should Rely on Samyoung Electronics's (KRX:005680) Statutory Earnings

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. In this article, we'll look at how useful this year's statutory profit is, when analysing Samyoung Electronics (KRX:005680).

While Samyoung Electronics was able to generate revenue of ₩196.1b in the last twelve months, we think its profit result of ₩11.0b was more important. Below, you can see that both its revenue and its profit have fallen over the last three years.

View our latest analysis for Samyoung Electronics

Importantly, statutory profits are not always the best tool for understanding a company's true earnings power, so it's well worth examining profits in a little more detail. This article will focus on the impact unusual items have had on Samyoung Electronics' statutory earnings. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

How Do Unusual Items Influence Profit?

For anyone who wants to understand Samyoung Electronics' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩1.9b worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. If Samyoung Electronics doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Our Take On Samyoung Electronics' Profit Performance

Arguably, Samyoung Electronics' statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Samyoung Electronics' true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. So while earnings quality is important, it's equally important to consider the risks facing Samyoung Electronics at this point in time. Case in point: We've spotted 1 warning sign for Samyoung Electronics you should be aware of.

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