Robust Earnings May Not Tell The Whole Story For Sciuker Frames (BIT:SCK)

Sciuker Frames S.p.A. (BIT:SCK) announced strong profits, but the stock was stagnant. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

See our latest analysis for Sciuker Frames

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Sciuker Frames expanded the number of shares on issue by 96% 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 Sciuker Frames' historical EPS growth by clicking on this link.

How Is Dilution Impacting Sciuker Frames' Earnings Per Share? (EPS)

Sciuker Frames has improved its profit over the last three years, with an annualized gain of 1,117% in that time. In comparison, earnings per share only gained 518% over the same period. And at a glance the 2,650% gain in profit over the last year impresses. On the other hand, earnings per share are only up 1,296% in that time. And so, you can see quite clearly that dilution is having a rather significant impact on shareholders.

In the long term, earnings per share growth should beget share price growth. So Sciuker Frames shareholders will want to see that EPS figure continue to increase. 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.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sciuker Frames.

Our Take On Sciuker Frames' Profit Performance

Sciuker Frames shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. As a result, we think it may well be the case that Sciuker Frames' underlying earnings power is lower than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Sciuker Frames (including 1 which can't be ignored).

This note has only looked at a single factor that sheds light on the nature of Sciuker Frames' profit. But there are plenty of other ways to inform your opinion of a company. 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.
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