In This Article:
The market for Cadre Holdings, Inc.'s (NYSE:CDRE) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.
Check out our latest analysis for Cadre Holdings
In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. In fact, Cadre Holdings increased the number of shares on issue by 8.0% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. 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. You can see a chart of Cadre Holdings' EPS by clicking here.
How Is Dilution Impacting Cadre Holdings' Earnings Per Share (EPS)?
Cadre Holdings has improved its profit over the last three years, with an annualized gain of 36% in that time. But on the other hand, earnings per share actually fell by 4.9% per year. Net income was down 8.1% over the last twelve months. But the EPS result was even worse, with the company recording a decline of 12%. And so, you can see quite clearly that dilution is influencing shareholder earnings.
In the long term, if Cadre Holdings' 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.
The Impact Of Unusual Items On Profit
On top of the dilution, we should also consider the US$11m impact of unusual items in the last year, which had the effect of suppressing profit. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Cadre Holdings to produce a higher profit next year, all else being equal.