Additional Considerations Required While Assessing Sammok S-FormLtd's (KOSDAQ:018310) Strong Earnings

Despite posting some strong earnings, the market for Sammok S-Form Co.,Ltd's (KOSDAQ:018310) stock hasn't moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers.

View our latest analysis for Sammok S-FormLtd

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Sammok S-FormLtd increased the number of shares on issue by 6.5% over the last twelve months by issuing new shares. Therefore, each share now receives a smaller portion of profit. 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 Sammok S-FormLtd's historical EPS growth by clicking on this link.

A Look At The Impact Of Sammok S-FormLtd's Dilution On Its Earnings Per Share (EPS)

As you can see above, Sammok S-FormLtd has been growing its net income over the last few years, with an annualized gain of 16,822% over three years. But EPS was only up 14,566% per year, in the exact same period. And at a glance the 104% gain in profit over the last year impresses. On the other hand, earnings per share are only up 94% in that time. 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 Sammok S-FormLtd 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 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 Sammok S-FormLtd.

Our Take On Sammok S-FormLtd's Profit Performance

Each Sammok S-FormLtd share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Because of this, we think that it may be that Sammok S-FormLtd's statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 3 warning signs for Sammok S-FormLtd you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Sammok S-FormLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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.