Iljin ElectricLtd (KRX:103590) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Iljin Electric Co.,Ltd's (KRX:103590) stock was strong after they recently reported robust earnings. We did some analysis and think that investors are missing some details hidden beneath the profit numbers.

See our latest analysis for Iljin ElectricLtd

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. In fact, Iljin ElectricLtd increased the number of shares on issue by 29% over the last twelve months by issuing new shares. 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. You can see a chart of Iljin ElectricLtd's EPS by clicking here.

A Look At The Impact Of Iljin ElectricLtd's Dilution On Its Earnings Per Share (EPS)

As you can see above, Iljin ElectricLtd has been growing its net income over the last few years, with an annualized gain of 617% over three years. And at a glance the 43% gain in profit over the last year impresses. On the other hand, earnings per share are only up 43% in that time. And so, you can see quite clearly that dilution is having a rather significant impact on shareholders.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So Iljin ElectricLtd shareholders will want to see that EPS figure continue to increase. 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 Iljin ElectricLtd.

Our Take On Iljin ElectricLtd's Profit Performance

Each Iljin ElectricLtd 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 Iljin ElectricLtd's statutory profits are better than its underlying earnings power. 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. If you want to do dive deeper into Iljin ElectricLtd, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Iljin ElectricLtd has 3 warning signs and it would be unwise to ignore these.

Today we've zoomed in on a single data point to better understand the nature of Iljin ElectricLtd'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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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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.