Despite posting some strong earnings, the market for Techbond Group Berhad’s (KLSE:TECHBND) stock hasn’t moved much. Our analysis suggests that shareholders have noticed something concerning in the numbers.
View our latest analysis for Techbond Group Berhad
One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Techbond Group Berhad increased the number of shares on issue by 27% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. 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 Techbond Group Berhad’s historical EPS growth by clicking on this link.
Techbond Group Berhad has improved its profit over the last three years, with an annualized gain of 49% in that time. And at a glance the 60% gain in profit over the last year impresses. But in comparison, EPS only increased by 52% over the same period. So you can see that the dilution has had a fairly significant impact on shareholders.
In the long term, earnings per share growth should beget share price growth. So Techbond Group Berhad 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 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.
Techbond Group Berhad shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. Because of this, we think that it may be that Techbond Group Berhad’s statutory profits are better than its underlying earnings power. Nonetheless, it’s still worth noting that its earnings per share have grown at 41% 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. In light of this, if you’d like to do more analysis on the company, it’s vital to be informed of the risks involved. At Simply Wall St, we found 3 warning signs for Techbond Group Berhad and we think they deserve your attention.
Read More: Techbond Group Berhad’s (KLSE:TECHBND) Earnings Are Weaker Than They Seem
