The recent earnings posted by Mah Sing Group Berhad (KLSE:MAHSING) were solid, but the stock didn't move as much as we expected. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.
Check out our latest analysis for Mah Sing Group Berhad
One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. As it happens, Mah Sing Group Berhad issued 5.5% more new shares 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. You can see a chart of Mah Sing Group Berhad's EPS by clicking here.
A Look At The Impact Of Mah Sing Group Berhad's Dilution On Its Earnings Per Share (EPS)
Mah Sing Group Berhad has improved its profit over the last three years, with an annualized gain of 163% in that time. And at a glance the 24% gain in profit over the last year impresses. On the other hand, earnings per share are only up 21% in that time. Therefore, the dilution is having a noteworthy influence on shareholder returns.
Changes in the share price do tend to reflect changes in earnings per share, in the long run. So Mah Sing Group Berhad shareholders will want to see that EPS figure continue to increase. 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 Mah Sing Group Berhad's Profit Performance
Each Mah Sing Group Berhad share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Because of this, we think that it may be that Mah Sing Group Berhad's statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. 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 Mah Sing Group Berhad, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Mah Sing Group Berhad you should be aware of.