Propel Global Berhad's (KLSE:PGB) Weak Earnings May Only Reveal A Part Of The Whole Picture

Propel Global Berhad's (KLSE:PGB) 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 Propel Global Berhad

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. Propel Global Berhad expanded the number of shares on issue by 12% 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. You can see a chart of Propel Global Berhad's EPS by clicking here.

A Look At The Impact Of Propel Global Berhad's Dilution On Its Earnings Per Share (EPS)

Propel Global Berhad has improved its profit over the last three years, with an annualized gain of 117% in that time. Net income was down 26% over the last twelve months. But the EPS result was even worse, with the company recording a decline of 32%. Therefore, the dilution is having a noteworthy influence on shareholder returns.

In the long term, if Propel Global Berhad's earnings per share can increase, then the share price should too. 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 Propel Global Berhad.

Our Take On Propel Global Berhad's Profit Performance

Over the last year Propel Global Berhad 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 Propel Global Berhad'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. 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. Case in point: We've spotted 3 warning signs for Propel Global Berhad you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Propel Global Berhad's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.