In This Article:
Saturn Oil & Gas Inc.'s (TSE:SOIL) robust earnings report didn't manage to move the market for its stock. Our analysis suggests that shareholders have noticed something concerning in the numbers.
Check out our latest analysis for Saturn Oil & Gas
In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Saturn Oil & Gas expanded the number of shares on issue by 45% over the last year. Therefore, each share now receives a smaller portion of profit. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. You can see a chart of Saturn Oil & Gas' EPS by clicking here.
How Is Dilution Impacting Saturn Oil & Gas' Earnings Per Share (EPS)?
Three years ago, Saturn Oil & Gas lost money. The good news is that profit was up 49% in the last twelve months. But earnings per share are actually down 4.3%, over that same period. This shows how dangerous it is to rely on net income alone, when measuring growth. So you can see that the dilution has had a fairly significant impact on shareholders.
If Saturn Oil & Gas' EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. 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 Saturn Oil & Gas' Profit Performance
Saturn Oil & Gas shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. As a result, we think it may well be the case that Saturn Oil & Gas' underlying earnings power is lower than its statutory profit. Sadly, its EPS was down over the last twelve months. 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. If you want to do dive deeper into Saturn Oil & Gas, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Saturn Oil & Gas (1 can't be ignored) you should be familiar with.