Chord Energy Corporation's (NASDAQ:CHRD) recent weak earnings report didn't cause a big stock movement. However, we believe that investors should be aware of some underlying factors which may be of concern.

Check out our latest analysis for Chord Energy

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. In fact, Chord Energy increased the number of shares on issue by 44% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. 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. Check out Chord Energy's historical EPS growth by clicking on this link.

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

Chord Energy has improved its profit over the last three years, with an annualized gain of 347% in that time. In comparison, earnings per share only gained 71% over the same period. Net income was down 17% over the last twelve months. But the EPS result was even worse, with the company recording a decline of 34%. And so, you can see quite clearly that dilution is having a rather significant impact on shareholders.

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

Our Take On Chord Energy's Profit Performance

Over the last year Chord Energy issued new shares and so, there's a noteworthy divergence between EPS and net income growth. As a result, we think it may well be the case that Chord Energy's underlying earnings power is lower than its statutory profit. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 3 warning signs for Chord Energy you should be mindful of and 1 of them is concerning.

Today we've zoomed in on a single data point to better understand the nature of Chord Energy's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.