Unsurprisingly, Avino Silver & Gold Mines Ltd.'s (TSE:ASM) stock price was strong on the back of its healthy earnings report. However, we think that shareholders may be missing some concerning details in the numbers.

See our latest analysis for Avino Silver & Gold Mines

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. In fact, Avino Silver & Gold Mines increased the number of shares on issue by 11% over the last twelve months by issuing new shares. Therefore, each share now receives a smaller portion of profit. 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 Avino Silver & Gold Mines' EPS by clicking here.

A Look At The Impact Of Avino Silver & Gold Mines' Dilution On Its Earnings Per Share (EPS)

Avino Silver & Gold Mines was losing money three years ago. The good news is that profit was up 68% in the last twelve months. But EPS was less impressive, up only 56% in that time. So you can see that the dilution has had a bit of an impact on shareholders.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So it will certainly be a positive for shareholders if Avino Silver & Gold Mines can grow EPS persistently. 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 Avino Silver & Gold Mines' Profit Performance

Avino Silver & Gold Mines shareholders should keep in mind how many new shares it is issuing, because, dilution clearly has the power to severely impact shareholder returns. Therefore, it seems possible to us that Avino Silver & Gold Mines' true underlying earnings power is actually less than its statutory profit. The good news is that, its earnings per share increased by 56% in the last year. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 1 warning sign for Avino Silver & Gold Mines and you'll want to know about it.