Should You Use SamchullyLtd's (KRX:004690) Statutory Earnings To Analyse It?

As a general rule, we think profitable companies are less risky than companies that lose money. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. This article will consider whether SamchullyLtd's (KRX:004690) statutory profits are a good guide to its underlying earnings.

It's good to see that over the last twelve months SamchullyLtd made a profit of ₩12.4b on revenue of ₩3.35t. As you can see in the chart below, its profit has declined over the last three years, even though its revenue has increased.

See our latest analysis for SamchullyLtd

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will focus on the impact unusual items have had on SamchullyLtd's 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?

Importantly, our data indicates that SamchullyLtd's profit was reduced by ₩13b, 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. 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 SamchullyLtd to produce a higher profit next year, all else being equal.

Our Take On SamchullyLtd's Profit Performance

Unusual items (expenses) detracted from SamchullyLtd's earnings over the last year, but we might see an improvement next year. Because of this, we think SamchullyLtd's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. 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'd like to know more about SamchullyLtd as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for SamchullyLtd (1 is concerning!) that we believe deserve your full attention.

This note has only looked at a single factor that sheds light on the nature of SamchullyLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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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