We Think That There Are More Issues For AZ-COM MARUWA Holdings (TSE:9090) Than Just Sluggish Earnings

AZ-COM MARUWA Holdings Inc.'s (TSE:9090) recent weak earnings report didn't cause a big stock movement. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

See our latest analysis for AZ-COM MARUWA Holdings

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, AZ-COM MARUWA Holdings increased the number of shares on issue by 7.0% over the last twelve months by issuing new shares. 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 AZ-COM MARUWA Holdings' historical EPS growth by clicking on this link.

A Look At The Impact Of AZ-COM MARUWA Holdings' Dilution On Its Earnings Per Share (EPS)

As you can see above, AZ-COM MARUWA Holdings has been growing its net income over the last few years, with an annualized gain of 30% over three years. Net income was down 16% over the last twelve months. But the EPS result was even worse, with the company recording a decline of 21%. Therefore, the dilution is having a noteworthy influence on shareholder returns.

If AZ-COM MARUWA Holdings' EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. 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.

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 AZ-COM MARUWA Holdings' Profit Performance

Over the last year AZ-COM MARUWA Holdings issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Therefore, it seems possible to us that AZ-COM MARUWA Holdings' true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 23% over the last three years. 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. If you want to do dive deeper into AZ-COM MARUWA Holdings, you'd also look into what risks it is currently facing. At Simply Wall St, we found 2 warning signs for AZ-COM MARUWA Holdings and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of AZ-COM MARUWA Holdings' 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 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.