Stock Analysis

Investors Shouldn't Be Too Comfortable With Sláturfélags Suðurlands svf's (ICE:SFS B) Earnings

ICSE:SFS B
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Sláturfélags Suðurlands svf. (ICE:SFS B) just reported some strong earnings, and the market reacted accordingly with a healthy uplift in the share price. However, our analysis suggests that shareholders may be missing some factors that indicate the earnings result was not as good as it looked.

See our latest analysis for Sláturfélags Suðurlands svf

earnings-and-revenue-history
ICSE:SFS B Earnings and Revenue History March 1st 2025

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Sláturfélags Suðurlands svf increased the number of shares on issue by 6.8% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. 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 Sláturfélags Suðurlands svf's historical EPS growth by clicking on this link.

A Look At The Impact Of Sláturfélags Suðurlands svf's Dilution On Its Earnings Per Share (EPS)

As you can see above, Sláturfélags Suðurlands svf has been growing its net income over the last few years, with an annualized gain of 273% over three years. In comparison, earnings per share only gained 235% over the same period. And over the last 12 months, the company grew its profit by 10%. But in comparison, EPS only increased by 3.9% over the same period. Therefore, the dilution is having a noteworthy influence on shareholder returns.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So it will certainly be a positive for shareholders if Sláturfélags Suðurlands svf can grow EPS persistently. 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.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sláturfélags Suðurlands svf.

Our Take On Sláturfélags Suðurlands svf's Profit Performance

Each Sláturfélags Suðurlands svf share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Therefore, it seems possible to us that Sláturfélags Suðurlands svf's true underlying earnings power is actually less than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Be aware that Sláturfélags Suðurlands svf is showing 2 warning signs in our investment analysis and 1 of those doesn't sit too well with us...

This note has only looked at a single factor that sheds light on the nature of Sláturfélags Suðurlands svf's profit. 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.