Iljin ElectricLtd's (KRX:103590) Problems Go Beyond Weak Profit

Last week's earnings announcement from Iljin Electric Co.,Ltd (KRX:103590) was disappointing to investors, with a sluggish profit figure. Our analysis has found some reasons to be concerned, beyond the weak headline 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. As it happens, Iljin ElectricLtd issued 29% more new shares over the last year. 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 Iljin ElectricLtd's historical EPS growth by clicking on this link.

How Is Dilution Impacting Iljin ElectricLtd's Earnings Per Share (EPS)?

Iljin ElectricLtd has improved its profit over the last three years, with an annualized gain of 167% in that time. In comparison, earnings per share only gained 124% over the same period. While we did see a very small decrease, net profit was basically flat over the last year. In contrast, earnings per share are actually down a full 17%, over the last twelve months. Therefore, one can observe that the dilution is having a fairly profound effect on shareholder returns.

If Iljin ElectricLtd's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. 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.

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 Iljin ElectricLtd's Profit Performance

Iljin ElectricLtd issued shares during the year, and that means its EPS performance lags its net income growth. Because of this, we think that it may be that Iljin ElectricLtd'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. If you'd like to know more about Iljin ElectricLtd as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Iljin ElectricLtd you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Iljin ElectricLtd's 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.