Solid Earnings May Not Tell The Whole Story For Aurelius Technologies Berhad (KLSE:ATECH)

Aurelius Technologies Berhad's (KLSE:ATECH) 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 Aurelius Technologies Berhad

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Aurelius Technologies Berhad expanded the number of shares on issue by 10% over the last year. That means its earnings are split among 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. Check out Aurelius Technologies Berhad's historical EPS growth by clicking on this link.

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

Aurelius Technologies Berhad has improved its profit over the last three years, with an annualized gain of 139% in that time. But on the other hand, earnings per share actually fell by 51% per year. And at a glance the 40% gain in profit over the last year impresses. On the other hand, earnings per share are only up 5.7% in that time. So you can see that the dilution has had a bit of an impact on shareholders.

In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if Aurelius Technologies 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 Aurelius Technologies Berhad's Profit Performance

Each Aurelius Technologies Berhad share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Therefore, it seems possible to us that Aurelius Technologies Berhad's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 5.7% 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. 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 Aurelius Technologies Berhad you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Aurelius Technologies Berhad's profit. But there are plenty of other ways to inform your opinion of a company. 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 that insiders are buying to be useful.

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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.