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Avino Silver & Gold Mines Ltd.'s (TSE:ASM) stock was strong after they recently reported robust earnings. However, we think that shareholders may be missing some concerning details in the numbers.
We've discovered 1 warning sign about Avino Silver & Gold Mines. View them for free.
In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Avino Silver & Gold Mines expanded the number of shares on issue by 7.9% over the last year. As a result, its net income is now split between a greater number of shares. 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 Avino Silver & Gold Mines' historical EPS growth by clicking on this link.
How Is Dilution Impacting Avino Silver & Gold Mines' Earnings Per Share (EPS)?
As you can see above, Avino Silver & Gold Mines has been growing its net income over the last few years, with an annualized gain of 3,123% over three years. But EPS was only up 2,296% per year, in the exact same period. And at a glance the 779% gain in profit over the last year impresses. But in comparison, EPS only increased by 694% over the same period. And so, you can see quite clearly that dilution is influencing shareholder earnings.
Changes in the share price do tend to reflect changes in earnings per share, in the long run. So Avino Silver & Gold Mines 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 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 Avino Silver & Gold Mines' Profit Performance
Each Avino Silver & Gold Mines 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 Avino Silver & Gold Mines' 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. If you want to do dive deeper into Avino Silver & Gold Mines, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Avino Silver & Gold Mines, and understanding it should be part of your investment process.