Nordisk Bergteknik (STO:NORB B) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Despite posting some strong earnings, the market for Nordisk Bergteknik AB (publ)'s (STO:NORB B) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

View our latest analysis for Nordisk Bergteknik

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. As it happens, Nordisk Bergteknik issued 7.5% more new shares over the last year. That means its earnings are split among a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. You can see a chart of Nordisk Bergteknik's EPS by clicking here.

How Is Dilution Impacting Nordisk Bergteknik's Earnings Per Share (EPS)?

Three years ago, Nordisk Bergteknik lost money. On the bright side, in the last twelve months it grew profit by 134%. But EPS was less impressive, up only 26% in that time. And so, you can see quite clearly that dilution is influencing shareholder earnings.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So Nordisk Bergteknik shareholders will want to see that EPS figure continue to increase. 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 Nordisk Bergteknik's Profit Performance

Each Nordisk Bergteknik share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Therefore, it seems possible to us that Nordisk Bergteknik's true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 26% 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. For instance, we've identified 2 warning signs for Nordisk Bergteknik (1 is a bit concerning) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of Nordisk Bergteknik'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.