Home / Business and Economy / Solarvest Stock: Dilution Masks Earnings Growth
Solarvest Stock: Dilution Masks Earnings Growth
27 Nov
Summary
- Solarvest Holdings Berhad issued new shares, increasing its share count by 30%.
- Company profits grew annually by 363%, but EPS growth lagged at 313%.
- Dilution could mean the company's true earnings power is less than reported.
Solarvest Holdings Berhad has seen its stock price remain stagnant despite robust earnings reports. A significant factor contributing to this market performance is the company's substantial increase in shares outstanding, rising by 30% over the past twelve months. This move dilutes the value of existing shares, as net income is now spread across a larger number of shares.
While Solarvest Holdings Berhad has demonstrated impressive profit growth, with an annualized gain of 363% over the last three years, its earnings per share (EPS) growth has lagged slightly at 313% for the same period. This discrepancy highlights the profound effect of share dilution on per-share returns. Specifically, the 94% profit increase observed in the last year contrasts with a 76% rise in EPS.
This dilution means that even as the company's profits grow, the actual benefit to individual shareholders might be diminished. Investors are advised to carefully consider the impact of share issuance when evaluating Solarvest Holdings Berhad's true underlying earnings power, which may be less than its statutory profit suggests. Persistent EPS growth is key for future share price appreciation.
