In This Article:
Last week's earnings announcement from LaserBond Limited (ASX:LBL) was disappointing to investors, with a sluggish profit figure. We did some analysis, and found that there are some reasons to be cautious about the headline numbers.
Check out our latest analysis for LaserBond
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, LaserBond issued 6.4% more new shares over the last year. As a result, its net income is now split between 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 LaserBond's EPS by clicking here.
How Is Dilution Impacting LaserBond's Earnings Per Share (EPS)?
Unfortunately, LaserBond's profit is down 9.4% per year over three years. Even looking at the last year, profit was still down 35%. Sadly, earnings per share fell further, down a full 38% in that time. So you can see that the dilution has had a bit of an impact on shareholders.
In the long term, if LaserBond's earnings per share can increase, then the share price should too. 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 LaserBond's Profit Performance
Over the last year LaserBond issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Therefore, it seems possible to us that LaserBond's true underlying earnings power is actually less than its statutory profit. Sadly, its EPS was down over the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about LaserBond as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for LaserBond you should be aware of.
Today we've zoomed in on a single data point to better understand the nature of LaserBond's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.