The market wasn't impressed with the soft earnings from Vivid Seats Inc. (NASDAQ:SEAT) recently. We did some further digging and think they have a few more reasons to be concerned beyond the statutory profit.

View our latest analysis for Vivid Seats

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. As it happens, Vivid Seats issued 6.1% 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. You can see a chart of Vivid Seats' EPS by clicking here.

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

Three years ago, Vivid Seats lost money. And even focusing only on the last twelve months, we see profit is down 40%. Like a sack of potatoes thrown from a delivery truck, EPS fell harder, down 59% in the same period. Therefore, the dilution is having a noteworthy influence on shareholder returns.

In the long term, if Vivid Seats' earnings per share can increase, then the share price should too. 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 Vivid Seats' Profit Performance

Over the last year Vivid Seats 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 Vivid Seats' statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for Vivid Seats you should be aware of.

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