We Think You Should Be Aware Of Some Concerning Factors In Greatview Aseptic Packaging's (HKG:468) Earnings

Greatview Aseptic Packaging Company Limited's (HKG:468) healthy profit numbers didn't contain any surprises for investors. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

See our latest analysis for Greatview Aseptic Packaging

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Greatview Aseptic Packaging increased the number of shares on issue by 5.3% over the last twelve months by issuing new shares. Therefore, each share now receives a smaller portion of profit. 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. You can see a chart of Greatview Aseptic Packaging's EPS by clicking here.

How Is Dilution Impacting Greatview Aseptic Packaging's Earnings Per Share (EPS)?

Unfortunately, Greatview Aseptic Packaging's profit is down 29% per year over three years. The good news is that profit was up 34% in the last twelve months. On the other hand, earnings per share are only up 34% over the same period. So you can see that the dilution has had a bit of an impact on shareholders.

In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if Greatview Aseptic Packaging can grow EPS persistently. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. 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 Greatview Aseptic Packaging's Profit Performance

Each Greatview Aseptic Packaging share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Therefore, it seems possible to us that Greatview Aseptic Packaging's true underlying earnings power is actually less than its statutory profit. But at least holders can take some solace from the 34% EPS growth 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. 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. For example - Greatview Aseptic Packaging has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Greatview Aseptic Packaging's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 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.