In This Article:
Chord Energy Corporation's (NASDAQ:CHRD) 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.
Our free stock report includes 3 warning signs investors should be aware of before investing in Chord Energy. Read for free now.
To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. As it happens, Chord Energy issued 39% 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. You can see a chart of Chord Energy's EPS by clicking here.
A Look At The Impact Of Chord Energy's Dilution On Its Earnings Per Share (EPS)
As you can see above, Chord Energy has been growing its net income over the last few years, with an annualized gain of 243% over three years. In comparison, earnings per share only gained 20% over the same period. Net income was down 6.2% over the last twelve months. Unfortunately for shareholders, though, the earnings per share result was even worse, declining 31%. So you can see that the dilution has had a fairly significant impact on shareholders.
In the long term, if Chord Energy'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 Chord Energy's Profit Performance
Chord Energy issued shares during the year, and that means its EPS performance lags its net income growth. As a result, we think it may well be the case that Chord Energy's underlying earnings power is lower than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 20% over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For instance, we've identified 3 warning signs for Chord Energy (2 are concerning) you should be familiar with.