Impressive Earnings May Not Tell The Whole Story For Avino Silver & Gold Mines (TSE:ASM)

Avino Silver & Gold Mines Ltd. (TSE:ASM) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, we think that shareholders may be missing some concerning details in the numbers.

View our latest analysis for Avino Silver & Gold Mines

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, Avino Silver & Gold Mines increased the number of shares on issue by 11% over the last twelve months by issuing new shares. Therefore, each share now receives a smaller portion of profit. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. Check out Avino Silver & Gold Mines' historical EPS growth by clicking on this link.

How Is Dilution Impacting Avino Silver & Gold Mines' Earnings Per Share (EPS)?

Avino Silver & Gold Mines was losing money three years ago. The good news is that profit was up 68% in the last twelve months. On the other hand, earnings per share are only up 56% over the same period. And so, you can see quite clearly that dilution is influencing shareholder earnings.

In the long term, earnings per share growth should beget share price growth. So Avino Silver & Gold Mines shareholders will want to see that EPS figure continue to increase. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.

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 Avino Silver & Gold Mines' Profit Performance

Each Avino Silver & Gold Mines share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Because of this, we think that it may be that Avino Silver & Gold Mines' statutory profits are better than its underlying earnings power. The good news is that, its earnings per share increased by 56% 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Avino Silver & Gold Mines and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Avino Silver & Gold Mines' 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. 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 with significant insider holdings 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.