Ancom Nylex Berhad's (KLSE:ANCOMNY) 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.
View our latest analysis for Ancom Nylex Berhad
To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. As it happens, Ancom Nylex Berhad issued 20% more new shares over the last year. As a result, its net income is now split between 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. You can see a chart of Ancom Nylex Berhad's EPS by clicking here.
Ancom Nylex Berhad has improved its profit over the last three years, with an annualized gain of 148% in that time. But EPS was only up 89% per year, in the exact same period. Net profit actually dropped by 2.7% in the last year. Unfortunately for shareholders, though, the earnings per share result was even worse, declining 6.3%. So you can see that the dilution has had a bit of an impact on shareholders.
If Ancom Nylex Berhad's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. 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.
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.
Ancom Nylex Berhad issued shares during the year, and that means its EPS performance lags its net income growth. Because of this, we think that it may be that Ancom Nylex Berhad's statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. 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 want to do dive deeper into Ancom Nylex Berhad, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Ancom Nylex Berhad you should be aware of.