Epoxy Base Electronic Material's (SHSE:603002) Anemic Earnings Might Be Worse Than You Think

Epoxy Base Electronic Material Corporation Limited's (SHSE:603002) recent weak earnings report didn't cause a big stock movement. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

Check out our latest analysis for Epoxy Base Electronic Material

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, Epoxy Base Electronic Material issued 25% more new shares over the last year. Therefore, each share now receives a smaller portion of profit. To talk about net income, without noticing earnings per share, is to be distracted by the big numbers while ignoring the smaller numbers that talk to per share value. Check out Epoxy Base Electronic Material's historical EPS growth by clicking on this link.

A Look At The Impact Of Epoxy Base Electronic Material's Dilution On Its Earnings Per Share (EPS)

Unfortunately, Epoxy Base Electronic Material's profit is down 71% per year over three years. Even looking at the last year, profit was still down 85%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 87% in the same period. So you can see that the dilution has had a fairly significant impact on shareholders.

In the long term, if Epoxy Base Electronic Material's earnings per share can increase, then the share price should too. 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 Epoxy Base Electronic Material's Profit Performance

Over the last year Epoxy Base Electronic Material issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Because of this, we think that it may be that Epoxy Base Electronic Material's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've discovered 4 warning signs that you should run your eye over to get a better picture of Epoxy Base Electronic Material.

This note has only looked at a single factor that sheds light on the nature of Epoxy Base Electronic Material'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. 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.