ConocoPhillips' (NYSE:COP) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for ConocoPhillips

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, ConocoPhillips increased the number of shares on issue by 8.2% 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. Check out ConocoPhillips' historical EPS growth by clicking on this link.

How Is Dilution Impacting ConocoPhillips' Earnings Per Share (EPS)?

ConocoPhillips has improved its profit over the last three years, with an annualized gain of 14% in that time. Net profit actually dropped by 16% in the last year. But the EPS result was even worse, with the company recording a decline of 14%. So you can see that the dilution has had a bit of an impact on shareholders.

If ConocoPhillips' EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. 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.

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 ConocoPhillips' Profit Performance

Over the last year ConocoPhillips issued new shares and so, there's a noteworthy divergence between EPS and net income growth. Because of this, we think that it may be that ConocoPhillips' statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 28% per annum growth in EPS for the last three. 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. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of ConocoPhillips.

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