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Investors were disappointed by Firan Technology Group Corporation's (TSE:FTG ) latest earnings release. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.
View our latest analysis for Firan Technology Group
One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Firan Technology Group increased the number of shares on issue by 5.4% over the last twelve months by issuing new shares. 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. You can see a chart of Firan Technology Group's EPS by clicking here.
How Is Dilution Impacting Firan Technology Group's Earnings Per Share (EPS)?
Firan Technology Group has improved its profit over the last three years, with an annualized gain of 4,125% in that time. Net income was down 6.9% over the last twelve months. Unfortunately for shareholders, though, the earnings per share result was even worse, declining 6.8%. Therefore, the dilution is having a noteworthy influence on shareholder returns.
If Firan Technology Group's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. 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 Firan Technology Group's Profit Performance
Over the last year Firan Technology Group issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Therefore, it seems possible to us that Firan Technology Group's true underlying earnings power is actually less than its statutory profit. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Ultimately, this article has formed an opinion based on historical data. However, it can also be great to think about what analysts are forecasting for the future. At Simply Wall St, we have analyst estimates which you can view by clicking here.