We Think That There Are More Issues For COWELL FASHIONLtd (KOSDAQ:033290) Than Just Sluggish Earnings

COWELL FASHION Co.,Ltd's (KOSDAQ:033290) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

Check out our latest analysis for COWELL FASHIONLtd

How Do Unusual Items Influence Profit?

Importantly, our data indicates that COWELL FASHIONLtd's profit received a boost of ₩7.4b in unusual items, over the last year. 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 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 COWELL FASHIONLtd doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

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

Our Take On COWELL FASHIONLtd's Profit Performance

We'd posit that COWELL FASHIONLtd's statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that COWELL FASHIONLtd's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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 want to do dive deeper into COWELL FASHIONLtd, you'd also look into what risks it is currently facing. Case in point: We've spotted 5 warning signs for COWELL FASHIONLtd you should be mindful of and 3 of these are potentially serious.

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