Should Weakness in Tianjin Chase Sun Pharmaceutical Co.,Ltd's (SZSE:300026) Stock Be Seen As A Sign That Market Will Correct The Share Price Given Decent Financials?
Tianjin Chase Sun Pharmaceutical株式会社(SZSE:300026)の株式が弱くなったことは、優れた財務状況を考慮して株価が調整される兆候と見なすべきですか?
Tianjin Chase Sun PharmaceuticalLtd (SZSE:300026) has had a rough three months with its share price down 14%. However, stock prices are usually driven by a company's financials over the long term, which in this case look pretty respectable. Particularly, we will be paying attention to Tianjin Chase Sun PharmaceuticalLtd's 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.
How To Calculate Return On Equity?
ROE 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 Tianjin Chase Sun PharmaceuticalLtd is:
7.5% = CN¥663m ÷ CN¥8.9b (Based on the trailing twelve months to September 2023).
The 'return' is the yearly profit. That means that for every CN¥1 worth of shareholders' equity, the company generated CN¥0.07 in profit.
What Is The Relationship Between ROE And Earnings Growth?
So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. 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.
Tianjin Chase Sun PharmaceuticalLtd's Earnings Growth And 7.5% ROE
At first glance, Tianjin Chase Sun PharmaceuticalLtd's ROE doesn't look very promising. However, its ROE is similar to the industry average of 8.5%, so we won't completely dismiss the company. On the other hand, Tianjin Chase Sun PharmaceuticalLtd reported a moderate 17% net income growth over the past five years. Considering the moderately low ROE, it is quite possible that there might be some other aspects that are positively influencing the company's earnings growth. Such as - high earnings retention or an efficient management in place.
As a next step, we compared Tianjin Chase Sun PharmaceuticalLtd's 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 11%.
SZSE:300026 Past Earnings Growth February 26th 2024
Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. If you're wondering about Tianjin Chase Sun PharmaceuticalLtd's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
Is Tianjin Chase Sun PharmaceuticalLtd Efficiently Re-investing Its Profits?
In Tianjin Chase Sun PharmaceuticalLtd's case, its respectable earnings growth can probably be explained by its low three-year median payout ratio of 17% (or a retention ratio of 83%), which suggests that the company is investing most of its profits to grow its business.
Besides, Tianjin Chase Sun PharmaceuticalLtd has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders.
Summary
Overall, we feel that Tianjin Chase Sun PharmaceuticalLtd certainly does have some positive factors to consider. Despite its low rate of return, the fact that the company reinvests a very high portion of its profits into its business, no doubt contributed to its high earnings growth. The latest industry analyst forecasts show that the company is expected to maintain its current growth rate. 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.
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オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。