Should You Be Excited About Frontline Plc's (NYSE:FRO) 27% Return On Equity?
Should You Be Excited About Frontline Plc's (NYSE:FRO) 27% Return On Equity?
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity 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 Frontline plc (NYSE:FRO).
许多投资者仍在学习各种有用的指标，以便分析股票。本文是为那些想要了解股本回报率(ROE)的人提供的。为了使课程更加实用，我们将使用ROE来更好地理解Frontline plc(NYSE:FRO)。
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
股东权益回报率（ROE）是测试公司如何有效地增加其价值并管理投资者资金的指标。简而言之，它用于评估公司相对于股本资本的盈利能力。
How To Calculate Return On Equity?
如何计算股东权益报酬率？
The formula for ROE is:
roe的公式是：
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
净资产收益率 = 净利润（从持续经营中获得）÷ 股东权益
So, based on the above formula, the ROE for Frontline is:
可根据上述公式计算Frontline plc的ROE：
27% = US$638m ÷ US$2.4b (Based on the trailing twelve months to March 2024).
27% = US$638m ÷ US$2.4b (截至2024年3月的最新十二个月数据)
The 'return' is the amount earned after tax over the last twelve months. That means that for every $1 worth of shareholders' equity, the company generated $0.27 in profit.
‘回报’是指过去12个月税后赚取的金额。这意味着，公司每一美元的股东权益，创造了0.27美元的利润。
Does Frontline Have A Good ROE?
Frontline的ROE表现如何？
One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As is clear from the image below, Frontline has a better ROE than the average (16%) in the Oil and Gas industry.
判断一家公司是否具有良好的股本回报率的一种简单方法是将其与行业平均水平进行比较。这种方法的局限在于，一些公司与其他公司相比是非常不同的，即使属于同一行业分类。从下面的图片中就可以清楚地看出，Frontline在石油和燃气行业中的ROE比行业平均水平(16%)要高。
That is a good sign. Bear in mind, a high ROE doesn't always mean superior financial performance. A higher proportion of debt in a company's capital structure may also result in a high ROE, where the high debt levels could be a huge risk . To know the 3 risks we have identified for Frontline visit our risks dashboard for free.
这是一个好的迹象。请记住，高ROE并不总是意味着出色的财务表现。公司资本结构中更高比例的债务可能导致高ROE，高债务水平可能是巨大的风险。要了解Frontline所面临的3个风险，请免费访问我们的风险仪表板。
Why You Should Consider Debt When Looking At ROE
为什么在观察ROE时你应该考虑债务问题？
Virtually all companies need money to invest in the business, to grow profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. That will make the ROE look better than if no debt was used.
实际上，几乎所有公司都需要资金投资业务以增加利润。投资的现金可以来源于过去年度的利润(留存收益)，发行新股或借贷。在前两种情况下，ROE将反映此种投资用于增长的情况。在后一种情况下，用于增长的债务将提高回报，但不会影响股东权益。这将使ROE看起来比没有使用债务的ROE更好。
Frontline's Debt And Its 27% ROE
Frontline明显使用了大量债务来提高回报率，因为其债务与股本比率为1.72。毫无疑问，ROE是令人印象深刻的，但值得记住的是，如果该公司减少债务，则该指标可能会降低。债务增加风险并减少公司未来的选择，因此通常希望从中获得一些良好的回报。
Frontline clearly uses a high amount of debt to boost returns, as it has a debt to equity ratio of 1.72. There's no doubt the ROE is impressive, but it's worth keeping in mind that the metric could have been lower if the company were to reduce its debt. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it.
当然，Frontline可能不是最好的购买股票。因此，您可能希望查看此免费收藏的其他具有高ROE和低债务的公司。
Conclusion
结论
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 around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
股东回报率对于比较不同业务的质量很有用。能够在没有债务的情况下实现高回报率的公司可以被认为是高质量的公司。如果两家公司的债务与股权水平大致相同，而其中一家公司的ROE较高，我通常会更喜欢ROE较高的公司。
But when a business is high quality, the market often bids it up to a price that reflects this. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So I think it may be worth checking this free report on analyst forecasts for the company.
当然，索尼克汽车可能不是最好的股票购买。因此，您可能希望查看此高ROE和低债务的其他公司的免费收藏。
Of course Frontline may not be the best stock to buy. So you may wish to see this free collection of other companies that have high ROE and low debt.
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