ENN Energy Holdings (HKG:2688) has had a great run on the share market with its stock up by a significant 16% over the last three months. Since the market usually pay for a company's long-term fundamentals, we decided to study the company's key performance indicators to see if they could be influencing the market. Specifically, we decided to study ENN Energy Holdings' ROE in this article.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits.
How Is ROE Calculated?
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for ENN Energy Holdings is:
16% = CN¥7.7b ÷ CN¥48b (Based on the trailing twelve months to December 2023).
The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each HK$1 of shareholders' capital it has, the company made HK$0.16 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. 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.
ENN Energy Holdings' Earnings Growth And 16% ROE
To begin with, ENN Energy Holdings seems to have a respectable ROE. Especially when compared to the industry average of 10% the company's ROE looks pretty impressive. This probably laid the ground for ENN Energy Holdings' moderate 9.6% net income growth seen over the past five years.
Next, on comparing with the industry net income growth, we found that the growth figure reported by ENN Energy Holdings compares quite favourably to the industry average, which shows a decline of 0.5% over the last few years.
Earnings growth is a huge factor in stock valuation. 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 2688 fairly valued? This infographic on the company's intrinsic value has everything you need to know.
Is ENN Energy Holdings Efficiently Re-investing Its Profits?
With a three-year median payout ratio of 42% (implying that the company retains 58% of its profits), it seems that ENN Energy Holdings is reinvesting efficiently in a way that it sees respectable amount growth in its earnings and pays a dividend that's well covered.
Besides, ENN Energy Holdings has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 47%. Accordingly, forecasts suggest that ENN Energy Holdings' future ROE will be 15% which is again, similar to the current ROE.
Summary
In total, we are pretty happy with ENN Energy Holdings' 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. On studying current analyst estimates, we found that analysts expect the company to continue its recent growth streak. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
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.
enn energy holdings(HKG:2688)は、過去3か月間に株価が著しく16%上昇し、株式市場で素晴らしい成績を収めました。市場は通常、企業の長期的な基本的要因に支払いを行うため、私たちは企業の主要なパフォーマンス指標を調査することにしました。具体的には、この記事でENN Energy HoldingsのROEを調査することにしました。
ENN Energy Holdingsは利益の58%を再投資していることから、3年間の中央値の配当支払率は42%と見られます。したがって、同社は利益を効率的に再投資し、収益率を見て、十分に成長するように見えます。また、同社は少なくとも10年以上にわたって配当を支払っています。これは、同社が株主と利益を共有することに尽力していることを示しています。最新のアナリストデータによると、同社の今後3年間の配当支払率は約47%になると予想されています。そのため、予測によれば、ENNエナジーホールディングスの将来のROEは現在のROEと同じ15%になると考えられます。
ENN Energy Holdingsは利益の58%を再投資していることから、3年間の中央値の配当支払率は42%と見られます。したがって、同社は利益を効率的に再投資し、収益率を見て、十分に成長するように見えます。また、同社は少なくとも10年以上にわたって配当を支払っています。これは、同社が株主と利益を共有することに尽力していることを示しています。最新のアナリストデータによると、同社の今後3年間の配当支払率は約47%になると予想されています。そのため、予測によれば、ENNエナジーホールディングスの将来のROEは現在のROEと同じ15%になると考えられます。
ENN Energy Holdingsの成績には、非常に満足しています。特に、同社がビジネスに大きく投資し、高い収益率とともに収益の大きな成長をもたらしていることを見て、満足しています。現在のアナリスト予想を調べたところ、同社が最近の成長傾向を継続することを期待していることがわかりました。同社に関する最新のアナリスト予測について詳しく知るには、このアナリスト予測の可視化をご覧ください。
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。
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。