Henan Mingtai Al.IndustrialLtd's (SHSE:601677) Shareholders May Want To Dig Deeper Than Statutory Profit

The recent earnings posted by Henan Mingtai Al.Industrial Co.,Ltd. (SHSE:601677) were solid, but the stock didn't move as much as we expected. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

View our latest analysis for Henan Mingtai Al.IndustrialLtd

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Henan Mingtai Al.IndustrialLtd expanded the number of shares on issue by 28% over the last year. That means its earnings are split among a greater number of shares. 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 Henan Mingtai Al.IndustrialLtd's historical EPS growth by clicking on this link.

How Is Dilution Impacting Henan Mingtai Al.IndustrialLtd's Earnings Per Share (EPS)?

Henan Mingtai Al.IndustrialLtd has improved its profit over the last three years, with an annualized gain of 6.6% in that time. In contrast, earnings per share were actually down by 18% per year, in the exact same period. However, net income was pretty flat over the last year with a miniscule decrease. Meanwhile, EPS was actually down a full 11% over the period, highlighting just how different the profits look from a per-share perspective. So you can see that the dilution has had a fairly significant impact on shareholders.

If Henan Mingtai Al.IndustrialLtd'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 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 Henan Mingtai Al.IndustrialLtd's Profit Performance

Henan Mingtai Al.IndustrialLtd issued shares during the year, and that means its EPS performance lags its net income growth. Because of this, we think that it may be that Henan Mingtai Al.IndustrialLtd's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. You'd be interested to know, that we found 2 warning signs for Henan Mingtai Al.IndustrialLtd and you'll want to know about these.

Today we've zoomed in on a single data point to better understand the nature of Henan Mingtai Al.IndustrialLtd'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. 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.