Kerjaya Prospek Property Berhad's (KLSE:KPPROP) Promising Earnings May Rest On Soft Foundations

Despite posting some strong earnings, the market for Kerjaya Prospek Property Berhad's (KLSE:KPPROP) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

See our latest analysis for Kerjaya Prospek Property Berhad

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Kerjaya Prospek Property Berhad increased the number of shares on issue by 99% over the last twelve months by issuing new shares. As a result, its net income is now split between a greater number of shares. 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. You can see a chart of Kerjaya Prospek Property Berhad's EPS by clicking here.

How Is Dilution Impacting Kerjaya Prospek Property Berhad's Earnings Per Share? (EPS)

Unfortunately, we don't have any visibility into its profits three years back, because we lack the data. The good news is that profit was up 186% in the last twelve months. But EPS was far less impressive, dropping 67% in that time. This shows how dangerous it is to rely on net income alone, when measuring growth. And so, you can see quite clearly that dilution is having a rather significant impact on shareholders.

If Kerjaya Prospek Property Berhad's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. 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 Kerjaya Prospek Property Berhad.

Our Take On Kerjaya Prospek Property Berhad's Profit Performance

As we discussed above, Kerjaya Prospek Property Berhad's dilution over the last year has a major impact on its per-share earnings. As a result, we think it may well be the case that Kerjaya Prospek Property Berhad's underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. Every company has risks, and we've spotted 2 warning signs for Kerjaya Prospek Property Berhad (of which 1 can't be ignored!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of Kerjaya Prospek Property Berhad'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 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.
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