A lackluster earnings announcement from Dorian LPG Ltd. (NYSE:LPG) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.

See our latest analysis for DorianG

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. As it happens, DorianG issued 5.4% more new shares over the last year. 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 DorianG's historical EPS growth by clicking on this link.

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

DorianG has improved its profit over the last three years, with an annualized gain of 140% in that time. Net income was down 6.1% over the last twelve months. Unfortunately for shareholders, though, the earnings per share result was even worse, declining 8.1%. And so, you can see quite clearly that dilution is influencing shareholder earnings.

If DorianG's 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 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 DorianG's Profit Performance

DorianG issued shares during the year, and that means its EPS performance lags its net income growth. Because of this, we think that it may be that DorianG'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. 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. If you'd like to know more about DorianG as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with DorianG (including 1 which is significant).

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