We Think You Can Look Beyond Formula One Group's (NASDAQ:FWON.K) Lackluster Earnings
We've discovered 2 warning signs about Formula One Group. View them for free.
One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Formula One Group 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. Check out Formula One Group's historical EPS growth by clicking on this link.
Formula One Group was losing money three years ago. Even looking at the last year, profit was still down 95%. Sadly, earnings per share fell further, down a full 95% in that time. Therefore, the dilution is having a noteworthy influence on shareholder returns.
If Formula One Group'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 the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.
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.
Alongside that dilution, it's also important to note that Formula One Group's profit suffered from unusual items, which reduced profit by US$107m 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. In the twelve months to March 2025, Formula One Group had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker than it would otherwise be.
Formula One Group suffered from unusual items which depressed its profit in its last report; if that is not repeated then profit should be higher, all else being equal. 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. Considering all the aforementioned, we'd venture that Formula One Group's profit result is a pretty good guide to its true profitability, albeit a bit on the conservative side. So while earnings quality is important, it's equally important to consider the risks facing Formula One Group at this point in time. While conducting our analysis, we found that Formula One Group has 2 warning signs and it would be unwise to ignore these.
Our examination of Formula One Group has focussed on certain factors that can make its earnings look better than they are. 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. 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.
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.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
4 hours ago
- Yahoo
India says ready to make deal with US but national interest to be ‘supreme'
India is ready to make trade deals in the national interest, but not just to meet deadlines, Piyush Goyal, minister of trade and industry, has said. When asked if a deal could be reached by the July 9 deadline set by United States President Donald Trump for all countries to negotiate trade agreements, Goyal said on Friday that 'National interest will always be supreme. Keeping that in mind, if a good deal can be made, then India is always ready to make a deal with developed countries.' 'India never does any trade deal on the basis of deadline or timeframe … we will accept it only when it is completely finalised and in the national interest,' Goyal told reporters. On April 2, Trump threatened a range of tariffs for all US imports. For India, that was set at 26 percent. On April 9, he paused those tariffs for 90 days and set in place a rate of 10 percent in the interim while countries worked out their respective trade deals with Washington, DC. That deadline is set to expire July 9. 'Free trade agreements are possible only when there is two-way benefit; it should be a win-win agreement,' Goyal said. Indian officials returned from Washington this week after an extended visit to iron out lingering concerns on both sides. Trade talks between India and the US have hit roadblocks over disagreements on import duties for car components, steel, and farm goods. India is resisting opening up its agriculture and dairy sectors while asking for a favourable tariff for its goods entering the US compared with the ones available for countries like Vietnam and China. Separately, India has proposed retaliatory duties against the US at the World Trade Organization, saying Washington's 25 percent tariff on automobiles and some car parts would affect $2.89bn of India's exports, according to an official notification.
Yahoo
5 hours ago
- Yahoo
Jim Cramer on Palantir: 'I Say it Can be Bought'
Palantir Technologies Inc. (NASDAQ:PLTR) is one of the 25 stocks Jim Cramer recently shared insights on. Cramer highlighted his past predictions of the company stock going to $200 and said that he's 'sticking by that.' He commented: 'But what do we do with the very different set of winners for the first half? I want you to consider the GE Vernovas and the Howmets and the Palantirs, the stocks that are likely to finish the year dramatically higher from these exalted levels. What do you do with the stocks that have been on a run nonstop for 26 weeks, though? I think you send them on one of those two-week vacations like that Southeast Asia, Cape Town, maybe New Zealand. You pay no attention to them. Let them have a good time. Just take them off your screen, come back to them when the rotations run its course. A software engineer manipulating a vast network of code on virtual monitors. Palantir (NASDAQ:PLTR) develops software platforms that enable data integration, analysis, and decision-making for intelligence, defense, and commercial applications. The company provides tools like Gotham, Foundry, Apollo, and its AI platform to transform complex data into actionable insights. While we acknowledge the potential of PLTR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 hours ago
- Yahoo
Why AeroVironment Stock Plunged This Week
Dilution fears were raised on news of twin capital-raising moves. The company is floating both fresh stock and convertible senior notes in a public offering. 10 stocks we like better than AeroVironment › Military drone specialist AeroVironment (NASDAQ: AVAV) has generally done well as a stock lately. But that didn't happen this week, as news of a round of capital-raising dampened investor sentiment on the company. According to data compiled by S&P Global Market Intelligence, AeroVironment stock lost more than 11% of its value over the period. On Monday, AeroVironment announced it would float both a secondary share offering and an issue of convertible senior notes. The following day it set the parameters for the pair. With the former, it's selling just over 3.5 million shares of its common stock in an underwritten public offering at $248 per share. The underwriters of the flotation have been granted a 30-day option to collectively purchase an additional 29,234 shares. As for the convertible senior notes, AeroVironment is issuing $650 million aggregate principal amount at an interest rate of 0%. They are to be convertible at the investor's option under certain conditions and at certain periods. The initial conversion rate is slightly over 3.1 shares per $1,000 principal amount of the notes; the company said this equates to $322.40 per share. AeroVironment said it expected both issues to close on Thursday, July 3, and to net proceeds of around $1.47 billion. The company aims to use a bit more than $965 million to retire debt, with the remainder being directed to "general corporate purposes." These include an increase in manufacturing capacity. Currently, AeroVironment has just under 45.6 million shares outstanding, so if conversion rates are high with the notes, the twin issues could be dilutive. Shareholder dilution is the bane of many of an investor, so it's likely this was the root of their discontent during the week. On a fundamental basis, though, AeroVironment still looks like a good stock to own. The company seems to be doing well satisfying the growing demand for combat drones, as witnessed by its impressive fourth-quarter performance and its growing backlog. I wouldn't be down on the stock only because of its latest capital-raising moves. Before you buy stock in AeroVironment, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AeroVironment wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AeroVironment. The Motley Fool has a disclosure policy. Why AeroVironment Stock Plunged This Week was originally published by The Motley Fool