Bizlink Holding's (TWSE:3665) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Bizlink Holding Inc.'s (TWSE:3665) recent weak earnings report didn't cause a big stock movement. Our analysis suggests that along with soft profit numbers, investors should be aware of some other underlying weaknesses in the numbers.

View our latest analysis for Bizlink Holding

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. Bizlink Holding expanded the number of shares on issue by 6.1% over the last year. Therefore, each share now receives a smaller portion of profit. 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 Bizlink Holding's historical EPS growth by clicking on this link.

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

As you can see above, Bizlink Holding has been growing its net income over the last few years, with an annualized gain of 45% over three years. But EPS was only up 18% per year, in the exact same period. Net profit actually dropped by 11% in the last year. But the EPS result was even worse, with the company recording a decline of 14%. And so, you can see quite clearly that dilution is influencing shareholder earnings.

If Bizlink Holding's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. 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 Bizlink Holding's Profit Performance

Over the last year Bizlink Holding issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Therefore, it seems possible to us that Bizlink Holding's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 18% over the last three years. 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. So while earnings quality is important, it's equally important to consider the risks facing Bizlink Holding at this point in time. You'd be interested to know, that we found 2 warning signs for Bizlink Holding and you'll want to know about these bad boys.

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