We Think That There Are More Issues For Fulgent Sun International (Holding) (TWSE:9802) Than Just Sluggish Earnings

Fulgent Sun International (Holding) Co., Ltd.'s (TWSE:9802) 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.

Check out our latest analysis for Fulgent Sun International (Holding)

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, Fulgent Sun International (Holding) increased the number of shares on issue by 5.3% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. 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. Check out Fulgent Sun International (Holding)'s historical EPS growth by clicking on this link.

How Is Dilution Impacting Fulgent Sun International (Holding)'s Earnings Per Share (EPS)?

As you can see above, Fulgent Sun International (Holding) has been growing its net income over the last few years, with an annualized gain of 16% over three years. Net income was down 8.1% over the last twelve months. But the EPS result was even worse, with the company recording a decline of 8.1%. And so, you can see quite clearly that dilution is influencing shareholder earnings.

If Fulgent Sun International (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 Fulgent Sun International (Holding)'s Profit Performance

Fulgent Sun International (Holding) 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 Fulgent Sun International (Holding)'s statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 13% over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Fulgent Sun International (Holding) as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Fulgent Sun International (Holding) has 2 warning signs and it would be unwise to ignore them.

This note has only looked at a single factor that sheds light on the nature of Fulgent Sun International (Holding)'s profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 with high insider ownership.

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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.