The subdued market reaction suggests that Zhejiang Great Shengda Packaging Co.,Ltd.'s (SHSE:603687) recent earnings didn't contain any surprises. We think that investors are worried about some weaknesses underlying the earnings.

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, Zhejiang Great Shengda PackagingLtd issued 10.0% 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. Check out Zhejiang Great Shengda PackagingLtd's historical EPS growth by clicking on this link.

A Look At The Impact Of Zhejiang Great Shengda PackagingLtd's Dilution On Its Earnings Per Share (EPS)

Unfortunately, Zhejiang Great Shengda PackagingLtd's profit is down 54% per year over three years. And even focusing only on the last twelve months, we see profit is down 9.8%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 29% in the same period. Therefore, the dilution is having a noteworthy influence on shareholder returns.

In the long term, if Zhejiang Great Shengda PackagingLtd's earnings per share can increase, then the share price should too. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. 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 Zhejiang Great Shengda PackagingLtd's Profit Performance

Zhejiang Great Shengda PackagingLtd issued shares during the year, and that means its EPS performance lags its net income growth. Because of this, we think that it may be that Zhejiang Great Shengda PackagingLtd'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 Zhejiang Great Shengda PackagingLtd as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 2 warning signs for Zhejiang Great Shengda PackagingLtd and you'll want to know about them.

Today we've zoomed in on a single data point to better understand the nature of Zhejiang Great Shengda PackagingLtd's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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.