Is There More To The Story Than Jiin Yeeh Ding Enterprises's (GTSM:8390) Earnings Growth?

As a general rule, we think profitable companies are less risky than companies that lose money. Having said that, sometimes statutory profit levels are not a good guide to ongoing profitability, because some short term one-off factor has impacted profit levels. In this article, we'll look at how useful this year's statutory profit is, when analysing Jiin Yeeh Ding Enterprises (GTSM:8390).

It's good to see that over the last twelve months Jiin Yeeh Ding Enterprises made a profit of NT$243.5m on revenue of NT$3.28b. As depicted below, while its revenue may have fallen over the last few years, its profit actually improved.

See our latest analysis for Jiin Yeeh Ding Enterprises

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. In this article we'll look at how Jiin Yeeh Ding Enterprises is impacting shareholders by issuing new shares. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Jiin Yeeh Ding Enterprises.

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. As it happens, Jiin Yeeh Ding Enterprises issued 9.8% 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. Check out Jiin Yeeh Ding Enterprises' historical EPS growth by clicking on this link.

How Is Dilution Impacting Jiin Yeeh Ding Enterprises' Earnings Per Share? (EPS)

Jiin Yeeh Ding Enterprises has improved its profit over the last three years, with an annualized gain of 593% in that time. And at a glance the 103% gain in profit over the last year impresses. But in comparison, EPS only increased by 102% over the same period. So you can see that the dilution has had a bit of an impact on shareholders. Therefore, the dilution is having a noteworthy influence on shareholder returns. 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 it will certainly be a positive for shareholders if Jiin Yeeh Ding Enterprises can grow EPS persistently. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. 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.

Our Take On Jiin Yeeh Ding Enterprises' Profit Performance

Each Jiin Yeeh Ding Enterprises 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 Jiin Yeeh Ding Enterprises' statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Jiin Yeeh Ding Enterprises you should know about.

This note has only looked at a single factor that sheds light on the nature of Jiin Yeeh Ding Enterprises' 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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This article by Simply Wall St is general in nature. 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.
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