Nimbus Group's (STO:BOAT) Anemic Earnings Might Be Worse Than You Think

Last week's earnings announcement from Nimbus Group AB (Publ) (STO:BOAT) was disappointing to investors, with a sluggish profit figure. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

See our latest analysis for Nimbus Group

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. Nimbus Group expanded the number of shares on issue by 10.0% over the last year. As a result, its net income is now split between 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 Nimbus Group's EPS by clicking here.

A Look At The Impact Of Nimbus Group's Dilution On Its Earnings Per Share (EPS)

Unfortunately, Nimbus Group's profit is down 41% per year over three years. And even focusing only on the last twelve months, we see profit is down 70%. Sadly, earnings per share fell further, down a full 72% in that time. Therefore, the dilution is having a noteworthy influence on shareholder returns.

If Nimbus Group'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.

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 Nimbus Group's Profit Performance

Nimbus Group issued shares during the year, and that means its EPS performance lags its net income growth. Because of this, we think that it may be that Nimbus Group's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. While conducting our analysis, we found that Nimbus Group has 3 warning signs and it would be unwise to ignore these.

Today we've zoomed in on a single data point to better understand the nature of Nimbus Group'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.