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A lackluster earnings announcement from Keppel Infrastructure Trust (SGX:A7RU) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.
See our latest analysis for Keppel Infrastructure Trust
One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Keppel Infrastructure Trust increased the number of shares on issue by 8.1% over the last twelve months by issuing new shares. 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 Keppel Infrastructure Trust's historical EPS growth by clicking on this link.
A Look At The Impact Of Keppel Infrastructure Trust's Dilution On Its Earnings Per Share (EPS)
Keppel Infrastructure Trust's net profit dropped by 14% per year over the last three years. And even focusing only on the last twelve months, we see profit is down 75%. Sadly, earnings per share fell further, down a full 77% in that time. So you can see that the dilution has had a bit of an impact on shareholders.
In the long term, if Keppel Infrastructure Trust'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 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 Keppel Infrastructure Trust's Profit Performance
Over the last year Keppel Infrastructure Trust 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 Keppel Infrastructure Trust's statutory profits are better than its underlying earnings power. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 4 warning signs for Keppel Infrastructure Trust (3 are concerning) you should be familiar with.