The Strong Earnings Posted By Jahwa Electronics (KRX:033240) Are A Good Indication Of The Strength Of The Business

Investors were underwhelmed by the solid earnings posted by Jahwa Electronics. Co., Ltd (KRX:033240) recently. Our analysis says that investors should be optimistic, as the strong profit is built on solid foundations.

Check out our latest analysis for Jahwa Electronics

How Do Unusual Items Influence Profit?

For anyone who wants to understand Jahwa Electronics' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₩11b 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Jahwa Electronics doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

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.

Our Take On Jahwa Electronics' Profit Performance

Unusual items (expenses) detracted from Jahwa Electronics' earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Jahwa Electronics' statutory profit actually understates its earnings potential! And it's also positive that 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 Jahwa Electronics, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Jahwa Electronics, and understanding this should be part of your investment process.

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