We Think You Can Look Beyond KT's (KRX:030200) Lackluster Earnings

The market for KT Corporation's (KRX:030200) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

Check out our latest analysis for KT

How Do Unusual Items Influence Profit?

Importantly, our data indicates that KT's profit was reduced by ₩261b, 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 that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect KT to produce a higher profit next year, all else being equal.

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 KT's Profit Performance

Because unusual items detracted from KT's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think KT's earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 41% annually, over the last three years. 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 KT as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for KT and you'll want to know about it.

Today we've zoomed in on a single data point to better understand the nature of KT's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 that insiders are buying 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.