Some Investors May Be Willing To Look Past Young's Brewery's (LON:YNGA) Soft Earnings

Soft earnings didn't appear to concern Young & Co.'s Brewery, P.L.C.'s (LON:YNGA) shareholders over the last week. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

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To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. As it happens, Young's Brewery issued 6.2% more new shares over the last year. As a result, its net income is now split between 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 Young's Brewery's historical EPS growth by clicking on this link.

A Look At The Impact Of Young's Brewery's Dilution On Its Earnings Per Share (EPS)

Unfortunately, Young's Brewery's profit is down 61% per year over three years. And even focusing only on the last twelve months, we see profit is down 12%. Sadly, earnings per share fell further, down a full 17% in that time. And so, you can see quite clearly that dilution is influencing shareholder earnings.

If Young's Brewery's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. 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.

How Do Unusual Items Influence Profit?

On top of the dilution, we should also consider the UK£34m impact of unusual items in the last year, which had the effect of suppressing profit. 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, after all, that's exactly what the accounting terminology implies. Young's Brewery took a rather significant hit from unusual items in the year to March 2025. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.

Our Take On Young's Brewery's Profit Performance

To sum it all up, Young's Brewery took a hit from unusual items which pushed its profit down; without that, it would have made more money. But on the other hand, the company issued more shares, so without buying more shares each shareholder will end up with a smaller part of the profit. Based on these factors, we think that Young's Brewery's profits are a reasonably conservative guide to its underlying profitability. If you want to do dive deeper into Young's Brewery, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Young's Brewery and you'll want to know about these.

In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business. 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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.