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The recent earnings posted by Planoptik AG (ETR:P4O) 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.
See our latest analysis for Planoptik
In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. As it happens, Planoptik issued 5.9% 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. Check out Planoptik's historical EPS growth by clicking on this link.
A Look At The Impact Of Planoptik's Dilution On Its Earnings Per Share (EPS)
Planoptik has improved its profit over the last three years, with an annualized gain of 630% in that time. But EPS was only up 492% per year, in the exact same period. Net income was down 3.3% over the last twelve months. Unfortunately for shareholders, though, the earnings per share result was even worse, declining 8.7%. So you can see that the dilution has had a bit of an impact on shareholders.
If Planoptik's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. 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.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Planoptik.
Our Take On Planoptik's Profit Performance
Planoptik issued shares during the year, and that means its EPS performance lags its net income growth. Because of this, we think that it may be that Planoptik's statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 2 warning signs for Planoptik and we think they deserve your attention.
This note has only looked at a single factor that sheds light on the nature of Planoptik's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.