Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). To keep the lesson grounded in practicality, we'll use ROE to better understand Sichuan Qiaoyuan Gas Co.,Ltd (SZSE:301286).
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. Put another way, it reveals the company's success at turning shareholder investments into profits.
View our latest analysis for Sichuan Qiaoyuan GasLtd
How Do You 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 Sichuan Qiaoyuan GasLtd is:
8.4% = CN¥130m ÷ CN¥1.6b (Based on the trailing twelve months to September 2022).
The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each CN¥1 of shareholders' capital it has, the company made CN¥0.08 in profit.
Does Sichuan Qiaoyuan GasLtd Have A Good Return On Equity?
Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. If you look at the image below, you can see Sichuan Qiaoyuan GasLtd has a similar ROE to the average in the Chemicals industry classification (9.6%).
SZSE:301286 Return on Equity December 20th 2022
So while the ROE is not exceptional, at least its acceptable. While at least the ROE is not lower than the industry, its still worth checking what role the company's debt plays as high debt levels relative to equity may also make the ROE appear high. If so, this increases its exposure to financial risk. To know the 3 risks we have identified for Sichuan Qiaoyuan GasLtd visit our risks dashboard for free.
The Importance Of Debt To Return On Equity
Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking.
Combining Sichuan Qiaoyuan GasLtd's Debt And Its 8.4% Return On Equity
Sichuan Qiaoyuan GasLtd has a debt to equity ratio of just 0.081, which is very low. I'm not impressed with its ROE, but the debt levels are not too high, indicating the business has decent prospects. Judicious use of debt to improve returns can certainly be a good thing, although it does elevate risk slightly and reduce future optionality.
Summary
Return on equity is useful for comparing the quality of different businesses. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have the same ROE, then I would generally prefer the one with less debt.
But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. Check the past profit growth by Sichuan Qiaoyuan GasLtd by looking at this visualization of past earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.
许多投资者仍在学习在分析股票时可能有用的各种指标。这篇文章是为那些想了解股本回报率(ROE)的人准备的。为了让这一课立足于实践，我们将使用净资产收益率来更好地了解四川侨源燃气股份有限公司(SZSE：301286)。
股本回报率(ROE)是对一家公司增值和管理投资者资金的效率的测试。换句话说，它揭示了该公司成功地将股东投资转化为利润。
查看我们对四川侨源燃气有限公司的最新分析
你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，四川侨源燃气股份有限公司的净资产收益率为：
8.4%=CN元1.3亿×CN元16亿元(基于截至2022年9月的12个月)。
“报税表”是过去12个月的税后收入。一种概念化的方法是，公司每拥有1元人民币的股东资本，就会获得0.08元人民币的利润。
四川侨源燃气股份有限公司股本回报率高吗？
可以说，评估公司净资产收益率最简单的方法是将其与所在行业的平均水平进行比较。然而，这种方法只是作为一种粗略的检查，因为在同一行业分类中，公司确实有很大的不同。如果你看下图，你可以看到四川侨源燃气有限公司的净资产收益率(ROE)与化工行业分类的平均水平(9.6%)相似。
深圳证券交易所：301286股本回报率2022年12月20日
因此，虽然净资产收益率并不例外，但至少是可以接受的。虽然净资产收益率至少不低于行业，但它仍然值得检查公司的债务起到了什么作用，因为债务相对于股权的高水平也可能使净资产收益率看起来很高。如果是这样的话，这将增加其金融风险敞口。要了解我们为四川侨源天然气有限公司确定的3个风险，请免费访问我们的风险仪表板。
债务对股本回报率的重要性
几乎所有的公司都需要资金来投资于业务，以增加利润。这些现金可以来自留存收益、发行新股(股权)或债务。在第一种和第二种情况下，净资产收益率将反映对企业投资的现金使用情况。在后一种情况下，增长所需的债务将提高回报，但不会影响股东权益。因此，债务的使用可以提高净资产收益率，尽管打个比方说，在暴风雨天气的情况下会有额外的风险。
结合四川侨源燃气有限公司的债务及其8.4%的股本回报率
四川侨源燃气有限公司的债务权益比率仅为0.081，这是非常低的。我对它的净资产收益率不太满意，但债务水平并不太高，这表明该公司的前景还不错。明智地利用债务来提高回报当然是一件好事，尽管它确实略微提高了风险，并减少了未来的选择权。
摘要
股本回报率在比较不同企业的质量时很有用。一家能够在没有债务的情况下实现高股本回报率的公司可以被认为是一家高质量的企业。如果两家公司的净资产收益率相同，那么我通常会倾向于债务较少的那一家。
但净资产收益率只是一个更大的谜题的一部分，因为高质量企业的市盈率往往很高。相对于股价反映的预期，利润增长率是一个特别重要的考虑因素。通过查看过去收益、收入和现金流的可视化来检查四川侨源天然气有限公司过去的利润增长情况。
当然了,如果你把目光投向别处，你可能会发现这是一笔很棒的投资。所以让我们来看看这个免费有趣的公司名单。
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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。
