Despite Energy International Investments Holdings Limited's (HKG:353) recent earnings report having lackluster headline numbers, the market responded positively. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Energy International Investments Holdings.

See our latest analysis for Energy International Investments Holdings

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, Energy International Investments Holdings issued 50% more new shares over the last year. That means its earnings are split among 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. You can see a chart of Energy International Investments Holdings' EPS by clicking here.

A Look At The Impact Of Energy International Investments Holdings' Dilution On Its Earnings Per Share (EPS)

Three years ago, Energy International Investments Holdings lost money. Even looking at the last year, profit was still down 61%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 62% in the same period. Therefore, one can observe that the dilution is having a fairly profound effect on shareholder returns.

If Energy International Investments Holdings' 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 that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Energy International Investments Holdings.

Our Take On Energy International Investments Holdings' Profit Performance

Energy International Investments Holdings issued shares during the year, and that means its EPS performance lags its net income growth. As a result, we think it may well be the case that Energy International Investments Holdings' underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 3 warning signs for Energy International Investments Holdings you should know about.

This note has only looked at a single factor that sheds light on the nature of Energy International Investments Holdings' 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 that insiders are buying to be useful.

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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.