Solid profit numbers didn't seem to be enough to please Shenzhen Yan Tian Port Holdings Co.,Ltd.'s (SZSE:000088) shareholders. Our analysis suggests they may be concerned about some underlying details.

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, Shenzhen Yan Tian Port HoldingsLtd issued 91% more new shares over the last year. 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. You can see a chart of Shenzhen Yan Tian Port HoldingsLtd's EPS by clicking here.

A Look At The Impact Of Shenzhen Yan Tian Port HoldingsLtd's Dilution On Its Earnings Per Share (EPS)

As you can see above, Shenzhen Yan Tian Port HoldingsLtd has been growing its net income over the last few years, with an annualized gain of 176% over three years. In comparison, earnings per share only gained 54% over the same period. And over the last 12 months, the company grew its profit by 11%. On the other hand, earnings per share are only up 51% in that time. And so, you can see quite clearly that dilution is having a rather significant impact on shareholders.

In the long term, earnings per share growth should beget share price growth. So it will certainly be a positive for shareholders if Shenzhen Yan Tian Port HoldingsLtd can grow EPS persistently. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. 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 Shenzhen Yan Tian Port HoldingsLtd.

The Impact Of Unusual Items On Profit

Finally, we should also consider the fact that unusual items boosted Shenzhen Yan Tian Port HoldingsLtd's net profit by CN¥31m over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. Which is hardly surprising, given the name. We can see that Shenzhen Yan Tian Port HoldingsLtd's positive unusual items were quite significant relative to its profit in the year to September 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Our Take On Shenzhen Yan Tian Port HoldingsLtd's Profit Performance

In its last report Shenzhen Yan Tian Port HoldingsLtd benefitted from unusual items which boosted its profit, which could make the profit seem better than it really is on a sustainable basis. And furthermore, it went and issued plenty of new shares, ensuring that each shareholder (who did not tip more money in) now owns a smaller proportion of the company. On reflection, the above-mentioned factors give us the strong impression that Shenzhen Yan Tian Port HoldingsLtd'sunderlying earnings power is not as good as it might seem, based on the statutory profit numbers. If you'd like to know more about Shenzhen Yan Tian Port HoldingsLtd 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 Shenzhen Yan Tian Port HoldingsLtd you should be mindful of and 1 of these bad boys doesn't sit too well with us.

Our examination of Shenzhen Yan Tian Port HoldingsLtd has focussed on certain factors that can make its earnings look better than they are. And, on that basis, we are somewhat skeptical. But there are plenty of other ways to inform your opinion of a company. 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.