Investors were disappointed with the weak earnings posted by CBIZ, Inc. (NYSE:CBZ ). However, our analysis suggests that the soft headline numbers are getting counterbalanced by some positive underlying factors.

View our latest analysis for CBIZ

To understand the value of a company's earnings growth, it is imperative to consider any dilution of shareholders' interests. In fact, CBIZ increased the number of shares on issue by 6.1% 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. You can see a chart of CBIZ's EPS by clicking here.

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

CBIZ's net profit dropped by 42% per year over the last three years. Even looking at the last year, profit was still down 66%. Sadly, earnings per share fell further, down a full 68% in that time. So you can see that the dilution has had a bit of an impact on shareholders.

In the long term, if CBIZ's 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.

The Impact Of Unusual Items On Profit

Alongside that dilution, it's also important to note that CBIZ's profit suffered from unusual items, which reduced profit by US$51m in the last twelve months. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. CBIZ took a rather significant hit from unusual items in the year to December 2024. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Our Take On CBIZ's Profit Performance

To sum it all up, CBIZ took a hit from unusual items which pushed its profit down; without that, it would have made more money. But on the other hand, the company issued more shares, so without buying more shares each shareholder will end up with a smaller part of the profit. Based on these factors, we think that CBIZ's profits are a reasonably conservative guide to its underlying profitability. If you'd like to know more about CBIZ as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 4 warning signs we've spotted with CBIZ (including 1 which can't be ignored).

In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business. 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.