Earnings Troubles May Signal Larger Issues for Vitesse Energy (NYSE:VTS) Shareholders

Vitesse Energy, Inc.'s (NYSE:VTS) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

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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, Vitesse Energy issued 31% more new shares over the last year. That means its earnings are split among a greater number of shares. To talk about net income, without noticing earnings per share, is to be distracted by the big numbers while ignoring the smaller numbers that talk to per share value. Check out Vitesse Energy's historical EPS growth by clicking on this link.

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

Unfortunately, we don't have any visibility into its profits three years back, because we lack the data. And even focusing only on the last twelve months, we see profit is down 55%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 62% in the same period. Therefore, one can observe that the dilution is having a fairly profound effect on shareholder returns.

In the long term, if Vitesse Energy'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.

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 Vitesse Energy's Profit Performance

Over the last year Vitesse Energy issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Therefore, it seems possible to us that Vitesse Energy'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 Vitesse Energy as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 5 warning signs for Vitesse Energy you should be mindful of and 3 of these bad boys are concerning.

Today we've zoomed in on a single data point to better understand the nature of Vitesse Energy'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. 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.