Unitech Printed Circuit Board's (TWSE:2367) Earnings Are Weaker Than They Seem

Despite posting some strong earnings, the market for Unitech Printed Circuit Board Corp.'s (TWSE:2367) stock hasn't moved much. Our analysis suggests that this might be because shareholders have noticed some concerning underlying factors.

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. As it happens, Unitech Printed Circuit Board issued 6.0% more new shares over the last year. 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 Unitech Printed Circuit Board's historical EPS growth by clicking on this link.

How Is Dilution Impacting Unitech Printed Circuit Board's Earnings Per Share (EPS)?

Unitech Printed Circuit Board was losing money three years ago. Zooming in to the last year, we still can't talk about growth rates coherently, since it made a loss last year. But mathematics aside, it is always good to see when a formerly unprofitable business come good (though we accept profit would have been higher if dilution had not been required). And so, you can see quite clearly that dilution is influencing shareholder earnings.

In the long term, if Unitech Printed Circuit Board's 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.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Unitech Printed Circuit Board.

Our Take On Unitech Printed Circuit Board's Profit Performance

Over the last year Unitech Printed Circuit Board issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Therefore, it seems possible to us that Unitech Printed Circuit Board's true underlying earnings power is actually less than its statutory profit. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. If you'd like to know more about Unitech Printed Circuit Board as a business, it's important to be aware of any risks it's facing. For example - Unitech Printed Circuit Board has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Unitech Printed Circuit Board's 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 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.