Jiangsu Jibeier Pharmaceutical Co., Ltd.'s (SHSE:688566) healthy profit numbers didn't contain any surprises for investors. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. Jiangsu Jibeier Pharmaceutical expanded the number of shares on issue by 5.5% over the last year. Therefore, each share now receives a smaller portion of profit. 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 Jiangsu Jibeier Pharmaceutical's historical EPS growth by clicking on this link.

A Look At The Impact Of Jiangsu Jibeier Pharmaceutical's Dilution On Its Earnings Per Share (EPS)

As you can see above, Jiangsu Jibeier Pharmaceutical has been growing its net income over the last few years, with an annualized gain of 88% over three years. And in the last year the company managed to bump profit up by 3.5%. On the other hand, earnings per share are pretty much flat, over the last twelve months. And so, you can see quite clearly that dilution is influencing shareholder earnings.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So it will certainly be a positive for shareholders if Jiangsu Jibeier Pharmaceutical can grow EPS persistently. 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 Jiangsu Jibeier Pharmaceutical's Profit Performance

Jiangsu Jibeier Pharmaceutical shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. Because of this, we think that it may be that Jiangsu Jibeier Pharmaceutical's statutory profits are better than its underlying earnings power. But the good news is that its EPS growth over the last three years has been very impressive. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 2 warning signs for Jiangsu Jibeier Pharmaceutical you should know about.

Today we've zoomed in on a single data point to better understand the nature of Jiangsu Jibeier Pharmaceutical'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. 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.

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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.