Weak Statutory Earnings May Not Tell The Whole Story For Auden Techno (TWSE:3138)

Auden Techno Corp.'s (TWSE:3138) 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 Auden Techno

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Auden Techno expanded the number of shares on issue by 7.4% 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. You can see a chart of Auden Techno's EPS by clicking here.

A Look At The Impact Of Auden Techno's Dilution On Its Earnings Per Share (EPS)

Auden Techno's net profit dropped by 24% per year over the last three years. Even looking at the last year, profit was still down 54%. Sadly, earnings per share fell further, down a full 56% in that time. Therefore, the dilution is having a noteworthy influence on shareholder returns.

In the long term, if Auden Techno's earnings per share can increase, then the share price should too. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. 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 Auden Techno.

Our Take On Auden Techno's Profit Performance

Auden Techno issued shares during the year, and that means its EPS performance lags its net income growth. Therefore, it seems possible to us that Auden Techno's true underlying earnings power is actually less than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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 Auden Techno as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Auden Techno you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Auden Techno's 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.