Robust Earnings May Not Tell The Whole Story For Eagle Bulk Shipping (NASDAQ:EGLE)

Despite posting some strong earnings, the market for Eagle Bulk Shipping Inc.'s (NASDAQ:EGLE) stock hasn't moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers.

See our latest analysis for Eagle Bulk Shipping

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Eagle Bulk Shipping expanded the number of shares on issue by 22% over the last year. Therefore, each share now receives a smaller portion of profit. 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 Eagle Bulk Shipping's historical EPS growth by clicking on this link.

A Look At The Impact Of Eagle Bulk Shipping's Dilution on Its Earnings Per Share (EPS).

Three years ago, Eagle Bulk Shipping lost money. Zooming in to the last year, we still can't talk about growth rates coherently, since it made a loss last year. What we do know is that while it's great to see a profit over the last twelve months, that profit would have been better, on a per share basis, if the company hadn't needed to issue shares. So you can see that the dilution has had a bit of an impact on shareholders.

In the long term, if Eagle Bulk Shipping'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 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.

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 Eagle Bulk Shipping's Profit Performance

Over the last year Eagle Bulk Shipping 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 Eagle Bulk Shipping's statutory profits are better than its underlying earnings power. The good news is that it earned a profit in the last twelve months, despite its previous loss. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 4 warning signs for Eagle Bulk Shipping you should be mindful of and 1 of these bad boys makes us a bit uncomfortable.

This note has only looked at a single factor that sheds light on the nature of Eagle Bulk Shipping's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.
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