Shandong Yisheng Livestock & Poultry Breeding's (SZSE:002458) Anemic Earnings Might Be Worse Than You Think

The subdued market reaction suggests that Shandong Yisheng Livestock & Poultry Breeding Co., Ltd.'s (SZSE:002458) recent earnings didn't contain any surprises. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for Shandong Yisheng Livestock & Poultry Breeding

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. As it happens, Shandong Yisheng Livestock & Poultry Breeding issued 11% more new shares over the last year. As a result, its net income is now split between a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. Check out Shandong Yisheng Livestock & Poultry Breeding's historical EPS growth by clicking on this link.

How Is Dilution Impacting Shandong Yisheng Livestock & Poultry Breeding's Earnings Per Share (EPS)?

We don't have any data on the company's profits from three years ago. Even looking at the last year, profit was still down 78%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 80% in the same period. So you can see that the dilution has had a bit of an impact on shareholders.

If Shandong Yisheng Livestock & Poultry Breeding's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.

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 Shandong Yisheng Livestock & Poultry Breeding's Profit Performance

Shandong Yisheng Livestock & Poultry Breeding issued shares during the year, and that means its EPS performance lags its net income growth. Therefore, it seems possible to us that Shandong Yisheng Livestock & Poultry Breeding's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the 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 Shandong Yisheng Livestock & Poultry Breeding, you'd also look into what risks it is currently facing. For example, we've found that Shandong Yisheng Livestock & Poultry Breeding has 3 warning signs (1 doesn't sit too well with us!) that deserve your attention before going any further with your analysis.

Today we've zoomed in on a single data point to better understand the nature of Shandong Yisheng Livestock & Poultry Breeding's 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. 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.