Grape King Bio's (TPE:1707) Anemic Earnings Might Be Worse Than You Think

A lackluster earnings announcement from Grape King Bio Ltd (TPE:1707) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Grape King Bio

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Grape King Bio expanded the number of shares on issue by 8.9% over the last year. As a result, its net income is now split between 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 Grape King Bio's historical EPS growth by clicking on this link.

A Look At The Impact Of Grape King Bio's Dilution on Its Earnings Per Share (EPS).

Unfortunately, Grape King Bio's profit is down 5.9% per year over three years. And even focusing only on the last twelve months, we see profit is down 2.8%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 3.0% in the same period. So you can see that the dilution has had a bit of an impact on shareholders.

If Grape King Bio'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 Grape King Bio's Profit Performance

Over the last year Grape King Bio issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Therefore, it seems possible to us that Grape King Bio's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 2 warning signs for Grape King Bio and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Grape King Bio'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 that insiders are buying.

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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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