TCC Group Holdings' (TWSE:1101) Sluggish Earnings Might Be Just The Beginning Of Its Problems

Last week's earnings announcement from TCC Group Holdings Co., Ltd. (TWSE:1101) was disappointing to investors, with a sluggish profit figure. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

View our latest analysis for TCC Group Holdings

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. TCC Group Holdings expanded the number of shares on issue by 5.5% 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. You can see a chart of TCC Group Holdings' EPS by clicking here.

A Look At The Impact Of TCC Group Holdings' Dilution On Its Earnings Per Share (EPS)

Unfortunately, TCC Group Holdings' profit is down 72% per year over three years. And even focusing only on the last twelve months, we see profit is down 20%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 23% in the same period. And so, you can see quite clearly that dilution is influencing shareholder earnings.

In the long term, if TCC Group Holdings' earnings per share can increase, then the share price should too. 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 TCC Group Holdings' Profit Performance

Over the last year TCC Group Holdings issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Because of this, we think that it may be that TCC Group Holdings' statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about TCC Group Holdings as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for TCC Group Holdings (of which 1 is significant!) you should know about.

Today we've zoomed in on a single data point to better understand the nature of TCC Group Holdings' profit. 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.