We Think B.O.S. Better Online Solutions' (NASDAQ:BOSC) Profit Is Only A Baseline For What They Can Achieve

B.O.S. Better Online Solutions Ltd. (NASDAQ:BOSC) just reported healthy earnings but the stock price didn't move much. Our analysis suggests that investors might be missing some promising details.

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One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. As it happens, B.O.S. Better Online Solutions issued 7.6% more new shares over the last year. Therefore, each share now receives a smaller portion of profit. 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 B.O.S. Better Online Solutions' historical EPS growth by clicking on this link.

A Look At The Impact Of B.O.S. Better Online Solutions' Dilution On Its Earnings Per Share (EPS)

B.O.S. Better Online Solutions has improved its profit over the last three years, with an annualized gain of 381% in that time. But EPS was only up 338% per year, in the exact same period. And the 60% profit boost in the last year certainly seems impressive at first glance. But in comparison, EPS only increased by 57% over the same period. Therefore, the dilution is having a noteworthy influence on shareholder returns.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So it will certainly be a positive for shareholders if B.O.S. Better Online Solutions can grow EPS persistently. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of B.O.S. Better Online Solutions.

How Do Unusual Items Influence Profit?

Alongside that dilution, it's also important to note that B.O.S. Better Online Solutions' profit suffered from unusual items, which reduced profit by US$1.9m in the last twelve months. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. B.O.S. Better Online Solutions took a rather significant hit from unusual items in the year to June 2025. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Our Take On B.O.S. Better Online Solutions' Profit Performance

B.O.S. Better Online Solutions suffered from unusual items which depressed its profit in its last report; if that is not repeated then profit should be higher, all else being equal. But unfortunately the dilution means that shareholders now own a smaller proportion of the company (assuming they maintained the same number of shares). That will weigh on earnings per share, even if it is not reflected in net income. Based on these factors, we think that B.O.S. Better Online Solutions' profits are a reasonably conservative guide to its underlying profitability. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 2 warning signs for B.O.S. Better Online Solutions and we think they deserve your attention.

In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business. 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. 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.