We Think You Should Be Aware Of Some Concerning Factors In Hume Cement Industries Berhad's (KLSE:HUMEIND) Earnings

Hume Cement Industries Berhad's (KLSE:HUMEIND) healthy profit numbers didn't contain any surprises for investors. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

See our latest analysis for Hume Cement Industries Berhad

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Hume Cement Industries Berhad expanded the number of shares on issue by 15% 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 Hume Cement Industries Berhad's historical EPS growth by clicking on this link.

How Is Dilution Impacting Hume Cement Industries Berhad's Earnings Per Share (EPS)?

Hume Cement Industries Berhad was losing money three years ago. On the bright side, in the last twelve months it grew profit by 33%. On the other hand, earnings per share are pretty much flat, over the last twelve months. And so, you can see quite clearly that dilution is influencing shareholder earnings.

In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if Hume Cement Industries Berhad can grow EPS persistently. 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.

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 Hume Cement Industries Berhad's Profit Performance

Hume Cement Industries Berhad shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. Therefore, it seems possible to us that Hume Cement Industries Berhad's true underlying earnings power is actually less than its statutory profit. The good news is that its earnings per share increased slightly in the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for Hume Cement Industries Berhad you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Hume Cement Industries 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.