Fastighetsbolaget Emilshus' (STO:EMIL B) Earnings Aren't As Good As They Appear

After announcing healthy earnings, Fastighetsbolaget Emilshus AB (publ)'s (STO:EMIL B) stock rose over the last week. While the headline numbers were strong, we found some underlying problems once we started looking at what drove earnings.

Our free stock report includes 3 warning signs investors should be aware of before investing in Fastighetsbolaget Emilshus. Read for free now.

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. Fastighetsbolaget Emilshus expanded the number of shares on issue by 19% over the last year. Therefore, each share now receives a smaller portion of profit. 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. You can see a chart of Fastighetsbolaget Emilshus' EPS by clicking here.

How Is Dilution Impacting Fastighetsbolaget Emilshus' Earnings Per Share (EPS)?

Unfortunately, Fastighetsbolaget Emilshus' profit is down 41% per year over three years. The good news is that profit was up 207% in the last twelve months. But EPS was less impressive, up only 170% in that time. Therefore, the dilution is having a noteworthy influence on shareholder returns.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So it will certainly be a positive for shareholders if Fastighetsbolaget Emilshus 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.

The Impact Of Unusual Items On Profit

Alongside that dilution, it's also important to note that Fastighetsbolaget Emilshus' profit was boosted by unusual items worth kr186m in the last twelve months. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Fastighetsbolaget Emilshus' positive unusual items were quite significant relative to its profit in the year to March 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Our Take On Fastighetsbolaget Emilshus' Profit Performance

In its last report Fastighetsbolaget Emilshus benefitted from unusual items which boosted its profit, which could make the profit seem better than it really is on a sustainable basis. On top of that, the dilution means that its earnings per share performance is worse than its profit performance. Considering all this we'd argue Fastighetsbolaget Emilshus' profits probably give an overly generous impression of its sustainable level of profitability. 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 3 warning signs we've spotted with Fastighetsbolaget Emilshus (including 1 which is a bit concerning).

Our examination of Fastighetsbolaget Emilshus has focussed on certain factors that can make its earnings look better than they are. And, on that basis, we are somewhat skeptical. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 with significant insider holdings 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.