With its stock down 9.9% over the past three months, it is easy to disregard Ningbo Fuda (SHSE:600724). But if you pay close attention, you might find that its key financial indicators look quite decent, which could mean that the stock could potentially rise in the long-term given how markets usually reward more resilient long-term fundamentals. Specifically, we decided to study Ningbo Fuda's ROE in this article.
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.
Check out our latest analysis for Ningbo Fuda
How Do You Calculate Return On Equity?
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Ningbo Fuda is:
14% = CN¥447m ÷ CN¥3.3b (Based on the trailing twelve months to June 2022).
The 'return' is the income the business earned over the last year. That means that for every CN¥1 worth of shareholders' equity, the company generated CN¥0.14 in profit.
Why Is ROE Important For Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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 Ningbo Fuda's Earnings Growth And 14% ROE
To start with, Ningbo Fuda's ROE looks acceptable. Especially when compared to the industry average of 9.8% the company's ROE looks pretty impressive. As you might expect, the 4.3% net income decline reported by Ningbo Fuda is a bit of a surprise. We reckon that there could be some other factors at play here that are preventing the company's growth. These include low earnings retention or poor allocation of capital.
That being said, we compared Ningbo Fuda's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 21% in the same period.
SHSE:600724 Past Earnings Growth September 20th 2022
Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. Is Ningbo Fuda fairly valued compared to other companies? These 3 valuation measures might help you decide.
Is Ningbo Fuda Efficiently Re-investing Its Profits?
With a high three-year median payout ratio of 68% (implying that 32% of the profits are retained), most of Ningbo Fuda's profits are being paid to shareholders, which explains the company's shrinking earnings. With only a little being reinvested into the business, earnings growth would obviously be low or non-existent. To know the 3 risks we have identified for Ningbo Fuda visit our risks dashboard for free.
In addition, Ningbo Fuda has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth.
Conclusion
Overall, we feel that Ningbo Fuda certainly does have some positive factors to consider. Although, we are disappointed to see a lack of growth in earnings even in spite of a high ROE. Bear in mind, the company reinvests a small portion of its profits, which means that investors aren't reaping the benefits of the high rate of return. Until now, we have only just grazed the surface of the company's past performance by looking at the company's fundamentals. So it may be worth checking this free detailed graph of Ningbo Fuda's past earnings, as well as revenue and cash flows to get a deeper insight into the company's performance.
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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.
在過去的三個月裏,寧波福達的股價下跌了9.9%,人們很容易忽視寧波福達(上交所:600724)。但如果你密切關注,你可能會發現,該公司的關鍵財務指標看起來相當不錯,這可能意味着,鑑於市場通常會獎勵更具彈性的長期基本面因素,該股可能會在長期內上漲。具體地説,我們決定在本文中研究寧波福達的淨資產收益率。
股本回報率(ROE)是對一家公司增值和管理投資者資金的效率的測試。換句話説,它揭示了該公司成功地將股東投資轉化為利潤。
查看我們對寧波富達的最新分析
你如何計算股本回報率?
股本回報率可使用以下公式計算:
股本回報率=(持續經營的)淨利潤?股東權益
因此,根據上述公式,寧波福達的淨資產收益率為:
14%=4.47億元×33億元(基於截至2022年6月的12個月)。
“回報”指的是企業在過去一年中獲得的收入。這意味着,每增加價值1元的股東權益,公司就會產生0.14元的利潤。
為什麼淨資產收益率對收益增長很重要?
到目前為止,我們已經瞭解到淨資產收益率衡量的是一家公司創造利潤的效率。根據公司將這些利潤再投資或“保留”多少,以及這樣做的效率如何,我們就能夠評估一家公司的收益增長潛力。假設其他條件不變,淨資產收益率和利潤保留率越高,與不一定具有這些特徵的公司相比,公司的增長率就越高。
寧波富達盈利增長與14%淨資產收益率的並列比較
首先,寧波富達的淨資產收益率看起來可以接受。特別是與9.8%的行業平均水平相比,該公司的淨資產收益率看起來相當令人印象深刻。正如你可能預料到的,寧波富達公佈的4.3%的淨利潤下降有點出人意料。我們認為,可能還有其他一些因素在阻礙該公司的增長。這些問題包括低收益留存或資本配置不善。
話雖如此,我們將寧波福達的業績與行業進行了比較,當我們發現該公司在同期盈利縮水的同時,該行業的盈利卻以21%的速度增長,這讓我們感到擔憂。
上海證券交易所:過去600724的收益增長2022年9月20日
盈利增長是評估一隻股票時需要考慮的一個重要指標。投資者應該嘗試確定預期的收益增長或下降是否已計入價格,無論是哪種情況。這樣做將有助於他們確定該股的未來看起來是光明的還是不祥的。與其他公司相比,寧波福達的估值是否公平?這3個估值指標可能會幫助你做出決定。
寧波福達是否有效地將利潤進行了再投資?
寧波富達的三年中值派息率高達68%(意味着32%的利潤被保留),大部分利潤都支付給了股東,這解釋了該公司收益不斷縮水的原因。由於只有一小部分再投資於該業務,盈利增長顯然會很低或根本不存在。要了解我們為寧波富達確定的3個風險,請免費訪問我們的風險儀錶板。
此外,寧波富達在至少十年的時間裏一直在發放股息,這表明,保持股息支付對管理層來説要重要得多,即使這是以犧牲業務增長為代價的。
結論
總體而言,我們認為寧波福達確實有一些積極的因素需要考慮。然而,我們失望地看到,儘管淨資產收益率很高,但收益增長乏力。請記住,該公司將一小部分利潤進行再投資,這意味着投資者沒有從高回報率中獲益。到目前為止,我們只是通過觀察公司的基本面來了解公司過去的業績。所以也許有必要檢查一下免費 詳細圖表寧波富達過去的收益,以及收入和現金流,以更深入地瞭解公司的業績。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。