Man Industries (India)'s (NSE:MANINDS) Promising Earnings May Rest On Soft Foundations

Despite posting some strong earnings, the market for Man Industries (India) Limited's (NSE:MANINDS) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

Check out our latest analysis for Man Industries (India)

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. Man Industries (India) expanded the number of shares on issue by 7.7% 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 Man Industries (India)'s historical EPS growth by clicking on this link.

A Look At The Impact Of Man Industries (India)'s Dilution On Its Earnings Per Share (EPS)

Man Industries (India) has improved its profit over the last three years, with an annualized gain of 4.3% in that time. But on the other hand, earnings per share actually fell by 1.4% per year. And at a glance the 55% gain in profit over the last year impresses. But in comparison, EPS only increased by 54% over the same period. And so, you can see quite clearly that dilution is influencing shareholder earnings.

In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if Man Industries (India) 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 Man Industries (India)'s Profit Performance

Man Industries (India) shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. Therefore, it seems possible to us that Man Industries (India)'s true underlying earnings power is actually less than its statutory profit. But at least holders can take some solace from the 54% 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Man Industries (India) you should know about.

This note has only looked at a single factor that sheds light on the nature of Man Industries (India)'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. 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.