Crescent Energy Company's (NYSE:CRGY) stock was strong after they recently reported robust earnings. We did some analysis and think that investors are missing some details hidden beneath the profit numbers.

See our latest analysis for Crescent Energy

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Crescent Energy expanded the number of shares on issue by 27% 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. Check out Crescent Energy's historical EPS growth by clicking on this link.

A Look At The Impact Of Crescent Energy's Dilution On Its Earnings Per Share (EPS)

Three years ago, Crescent Energy lost money. On the bright side, in the last twelve months it grew profit by 183%. But EPS was less impressive, up only 43% in that time. And so, you can see quite clearly that dilution is having a rather significant impact on shareholders.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So Crescent Energy shareholders will want to see that EPS figure continue to increase. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. 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.

The Impact Of Unusual Items On Profit

Alongside that dilution, it's also important to note that Crescent Energy's profit suffered from unusual items, which reduced profit by US$108m in the last twelve months. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Crescent Energy to produce a higher profit next year, all else being equal.

Our Take On Crescent Energy's Profit Performance

Crescent Energy suffered from unusual items which depressed its profit in its last report; if that is not repeated then profit should be higher, all else being equal. But unfortunately the dilution means that shareholders now own a smaller proportion of the company (assuming they maintained the same number of shares). That will weigh on earnings per share, even if it is not reflected in net income. Having considered these factors, we don't think Crescent Energy's statutory profits give an overly harsh view of the business. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Our analysis shows 4 warning signs for Crescent Energy (2 are a bit concerning!) and we strongly recommend you look at them before investing.