Solaris Energy Infrastructure's (NYSE:SEI) Shareholders Have More To Worry About Than Only Soft Earnings
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Following the release of a lackluster earnings report from Solaris Energy Infrastructure, Inc. (NYSE:SEI) the stock price made a strong positive move. We did some analysis and found some positive factors that investors might be paying attention to rather than profit.
See our latest analysis for Solaris Energy Infrastructure
In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. In fact, Solaris Energy Infrastructure increased the number of shares on issue by 37% over the last twelve months by issuing new shares. As a result, its net income is now split between 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. You can see a chart of Solaris Energy Infrastructure's EPS by clicking here.
A Look At The Impact Of Solaris Energy Infrastructure's Dilution On Its Earnings Per Share (EPS)
Solaris Energy Infrastructure was losing money three years ago. And even focusing only on the last twelve months, we see profit is down 46%. Sadly, earnings per share fell further, down a full 42% in that time. Therefore, one can observe that the dilution is having a fairly profound effect on shareholder returns.
In the long term, if Solaris Energy Infrastructure's earnings per share can increase, then the share price should too. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. 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.
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.
The Impact Of Unusual Items On Profit
On top of the dilution, we should also consider the US$3.8m impact of unusual items in the last year, which had the effect of suppressing profit. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Solaris Energy Infrastructure to produce a higher profit next year, all else being equal.