Shanghai Golden Bridge Info Tech Co., Ltd.'s (SHSE:603918) healthy profit numbers didn't contain any surprises for investors. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for Shanghai Golden Bridge Info Tech

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, Shanghai Golden Bridge Info Tech issued 20% more new shares over the last year. Therefore, each share now receives a smaller portion of profit. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. You can see a chart of Shanghai Golden Bridge Info Tech's EPS by clicking here.

How Is Dilution Impacting Shanghai Golden Bridge Info Tech's Earnings Per Share? (EPS)

Shanghai Golden Bridge Info Tech has improved its profit over the last three years, with an annualized gain of 73% in that time. In comparison, earnings per share only gained 48% over the same period. However, net income was pretty flat over the last year with a miniscule increase. In contrast, earnings per share are actually down a full 14%, over the last twelve months. So you can see that the dilution has had a bit of an impact on shareholders.

In the long term, if Shanghai Golden Bridge Info Tech'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 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 Shanghai Golden Bridge Info Tech.

Our Take On Shanghai Golden Bridge Info Tech's Profit Performance

Each Shanghai Golden Bridge Info Tech share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Because of this, we think that it may be that Shanghai Golden Bridge Info Tech's statutory profits are better than its underlying earnings power. Nonetheless, it's still worth noting that its earnings per share have grown at 48% over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 3 warning signs for Shanghai Golden Bridge Info Tech you should know about.

This note has only looked at a single factor that sheds light on the nature of Shanghai Golden Bridge Info Tech's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.