Medy-Tox's (KOSDAQ:086900) Anemic Earnings Might Be Worse Than You Think

Medy-Tox Inc.'s (KOSDAQ:086900) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Medy-Tox

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. Medy-Tox expanded the number of shares on issue by 9.3% over the last year. Therefore, each share now receives a smaller portion of profit. 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 Medy-Tox's historical EPS growth by clicking on this link.

A Look At The Impact Of Medy-Tox's Dilution On Its Earnings Per Share (EPS)

Three years ago, Medy-Tox lost money. And even focusing only on the last twelve months, we see profit is down 74%. Sadly, earnings per share fell further, down a full 77% in that time. So you can see that the dilution has had a bit of an impact on shareholders.

In the long term, if Medy-Tox's earnings per share can increase, then the share price should too. 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 Medy-Tox's Profit Performance

Over the last year Medy-Tox issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Because of this, we think that it may be that Medy-Tox's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 2 warning signs for Medy-Tox you should know about.

This note has only looked at a single factor that sheds light on the nature of Medy-Tox'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.