The market rallied behind Sino Land Company Limited's (HKG:83) stock, leading do a rise in the share price after its recent weak earnings report. We think that shareholders might be missing some concerning factors that our analysis found.

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, Sino Land issued 5.8% more new shares over the last year. 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 Sino Land's EPS by clicking here.

A Look At The Impact Of Sino Land's Dilution On Its Earnings Per Share (EPS)

Unfortunately, Sino Land's profit is down 54% per year over three years. Even looking at the last year, profit was still down 25%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 29% in the same period. So you can see that the dilution has had a bit of an impact on shareholders.

If Sino Land'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 Sino Land's Profit Performance

Over the last year Sino Land issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Because of this, we think that it may be that Sino Land's statutory profits are better than its underlying earnings power. 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. If you'd like to know more about Sino Land as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Sino Land you should be mindful of and 1 of them can't be ignored.

This note has only looked at a single factor that sheds light on the nature of Sino Land's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.