Tiong Nam Logistics Holdings Berhad's (KLSE:TNLOGIS) robust recent earnings didn't do much to move the stock. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.
To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. As it happens, Tiong Nam Logistics Holdings Berhad issued 13% 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 Tiong Nam Logistics Holdings Berhad's historical EPS growth by clicking on this link.
A Look At The Impact Of Tiong Nam Logistics Holdings Berhad's Dilution on Its Earnings Per Share (EPS).
Unfortunately, we don't have any visibility into its profits three years back, because we lack the data. On the bright side, in the last twelve months it grew profit by 1,588%. On the other hand, earnings per share are only up 1,392% over the same period. 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 Tiong Nam Logistics Holdings Berhad can grow EPS persistently. 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 Tiong Nam Logistics Holdings Berhad's Profit Performance
Each Tiong Nam Logistics Holdings Berhad share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Because of this, we think that it may be that Tiong Nam Logistics Holdings Berhad's statutory profits are better than its underlying earnings power. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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. To that end, you should learn about the 2 warning signs we've spotted with Tiong Nam Logistics Holdings Berhad (including 1 which is significant).
Today we've zoomed in on a single data point to better understand the nature of Tiong Nam Logistics Holdings 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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