Avid Bioservices' (NASDAQ:CDMO) stock is up by a considerable 22% over the past three months. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. Particularly, we will be paying attention to Avid Bioservices' ROE today.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
Check out our latest analysis for Avid Bioservices
How To Calculate Return On Equity?
The formula for return on equity is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Avid Bioservices is:
69% = US$123m ÷ US$179m (Based on the trailing twelve months to July 2022).
The 'return' is the profit over the last twelve months. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.69 in profit.
Why Is ROE Important For Earnings Growth?
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company's earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.
A Side By Side comparison of Avid Bioservices' Earnings Growth And 69% ROE
First thing first, we like that Avid Bioservices has an impressive ROE. Secondly, even when compared to the industry average of 23% the company's ROE is quite impressive. As a result, Avid Bioservices' exceptional 71% net income growth seen over the past five years, doesn't come as a surprise.
As a next step, we compared Avid Bioservices' net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 21%.
NasdaqCM:CDMO Past Earnings Growth September 8th 2022
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. This then helps them determine if the stock is placed for a bright or bleak future. Is Avid Bioservices fairly valued compared to other companies? These 3 valuation measures might help you decide.
Is Avid Bioservices Efficiently Re-investing Its Profits?
Avid Bioservices doesn't pay any dividend to its shareholders, meaning that the company has been reinvesting all of its profits into the business. This is likely what's driving the high earnings growth number discussed above.
Conclusion
Overall, we are quite pleased with Avid Bioservices' performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. That being so, according to the latest industry analyst forecasts, the company's earnings are expected to shrink in the future. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.
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.
过去三个月,艾维德生物服务公司(纳斯达克代码:CDMO)的股票大幅上涨了22%。鉴于该公司令人印象深刻的业绩,我们决定更仔细地研究其财务指标,因为公司的长期财务健康状况通常决定着市场结果。今天,我们将特别关注艾维德生物服务公司的净资产收益率。
股本回报率(ROE)是用来评估公司管理层利用公司资本效率的关键指标。换句话说,这是一个衡量公司股东提供的资本回报率的盈利比率。
查看我们对Avid生物服务的最新分析
如何计算股本回报率?
这个股本回报率公式是:
股本回报率=(持续经营的)净利润?股东权益
因此,根据上述公式,艾维德生物服务的净资产收益率为:
69%=1.23亿美元×1.79亿美元(基于截至2022年7月的12个月)。
“收益”是过去12个月的利润。另一种说法是,公司每持有价值1美元的股票,就能赚取0.69美元的利润。
为什么净资产收益率对收益增长很重要?
我们已经证实,净资产收益率是一家公司未来收益的有效盈利指标。根据公司将这些利润再投资或“保留”多少,以及这样做的效率如何,我们就能够评估一家公司的收益增长潜力。假设其他条件不变,净资产收益率和利润保留率越高,与不一定具有这些特征的公司相比,公司的增长率就越高。
艾维德生物服务公司盈利增长与净资产收益率69%的并列比较
首先,我们喜欢艾维德生物服务公司令人印象深刻的净资产收益率。其次,即使与23%的行业平均水平相比,该公司的净资产收益率也相当令人印象深刻。因此,过去五年,艾维德生物服务公司的净收入增长了71%,这并不令人意外。
下一步,我们将艾维德生物服务的净收入增长与行业进行了比较,令人欣喜的是,我们发现该公司看到的增长高于行业平均21%的增长。
NasdaqCM:CDMO过去的收益增长2022年9月8日
赋予一家公司价值的基础在很大程度上与其盈利增长挂钩。投资者下一步需要确定的是,预期的收益增长是否已经计入了股价。这有助于他们确定这只股票是为光明还是黯淡的未来做准备。与其他公司相比,艾维德生物服务公司的价值是否公平?这3个估值指标可能会帮助你做出决定。
艾维德生物服务公司是否有效地对其利润进行了再投资?
Avid生物服务公司不向股东支付任何股息,这意味着该公司一直在将所有利润再投资于业务。这很可能是推动上述高收益增长数字的原因。
结论
总体而言,我们对艾维德生物服务公司的表现相当满意。特别是,很高兴看到该公司在业务上投入了大量资金,并获得了高回报率,这导致了其收益的可观增长。在这种情况下,根据最新的行业分析师预测,该公司未来的收益预计将缩水。要了解更多有关该公司未来收益增长预测的信息,请查看以下内容免费报告分析师对该公司的预测,以了解更多信息。
对这篇文章有什么反馈吗?担心内容吗? 保持联系直接与我们联系。或者,也可以给编辑组发电子邮件,地址是implywallst.com。
本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。