TANH

The market shrugged off Tantech Holdings Ltd's (NASDAQ:TANH) weak earnings report. While shares were up, we believe there are some factors in the earnings report that might cause investors some concerns. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, Tantech Holdings increased the number of shares on issue by 2,843% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. Check out Tantech Holdings' historical EPS growth by clicking on this link. As you can see above, Tantech Holdings has been growing its net income over the last few years, with an annualized gain of 1,644% over three years. But on the other hand, earnings per share actually fell by 79% per year. Net profit actually dropped by 27% in the last year. But the EPS result was even worse, with the company recording a decline of 92%. And so, you can see quite clearly that dilution is having a rather significant impact on shareholders. If Tantech Holdings' 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 the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Tantech Holdings. Finally, we should also consider the fact that unusual items boosted Tantech Holdings' net profit by US$3.5m over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Tantech Holdings' positive unusual items were...