selah wrote:I was going to invest on this counter then some questions came into my mind why is the EPS 5.87 while we know the No. of share is above 1.9 billion how long does it take for the new shares to reflect in the earnings of the company. Because if we were to look at the current EPS it would be around ksh 2 making its P/E @ 12 as opposed to 4 presently.
E & O.E
True if you do a quick calculation the EPS will come to around 2.14 but what you should remember is the true meaning of DILUTED & BASIC EPS. An ordinary shareholder is supposed to enjoy and participate in the profits of a company but only from the point he/she joined thus all shares cannot be rated equally in terms of EPS and that's why you'll find that when going through most financial statements that have undergone a rights or bonus issue, you'll always find 2 EPS' i.e. a basic and a diluted EPS.
This is why it is always advisable to exercise your rights coz not all shares enjoy the previous period's income at the same level. Thus you should ensure you know the EPS you are quoting as to whether its diluted or not!
'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary