We Think That There Are More Issues For Ancom Nylex Berhad (KLSE:ANCOMNY) Than Just Sluggish Earnings
Ancom Nylex Berhad's (KLSE:ANCOMNY) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.
To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. As it happens, Ancom Nylex Berhad issued 16% more new shares over the last year. That means its earnings are split among 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. Check out Ancom Nylex Berhad's historical EPS growth by clicking on this link.
A Look At The Impact Of Ancom Nylex Berhad's Dilution On Its Earnings Per Share (EPS)
Ancom Nylex Berhad's net profit dropped by 6.9% per year over the last three years. Even looking at the last year, profit was still down 22%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 29% in the same period. So you can see that the dilution has had a bit of an impact on shareholders.
In the long term, if Ancom Nylex Berhad'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 that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.
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 Ancom Nylex Berhad's Profit Performance
Over the last year Ancom Nylex 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 Ancom Nylex Berhad's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 1 warning sign for Ancom Nylex Berhad you should be aware of.
Today we've zoomed in on a single data point to better understand the nature of Ancom Nylex 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. 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 with significant insider holdings to be useful.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
About KLSE:ANCOMNY
Ancom Nylex Berhad
Engages in the agricultural and industrial chemicals, public health and hygiene, animal health, polymer, logistics, information technology (IT), and media businesses in Malaysia and internationally.
Flawless balance sheet and good value.
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