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.
在过去的三个月里,宁波福达的股价下跌了9.9%,人们很容易忽视宁波福达(上交所:600724)。但如果你密切关注,你可能会发现,该公司的关键财务指标看起来相当不错,这可能意味着,鉴于市场通常会奖励更具弹性的长期基本面因素,该股可能会在长期内上涨。具体地说,我们决定在本文中研究宁波福达的净资产收益率。
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。
查看我们对宁波富达的最新分析
你如何计算股本回报率?
股本回报率可使用以下公式计算:
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,宁波福达的净资产收益率为:
14%=4.47亿元×33亿元(基于截至2022年6月的12个月)。
“回报”指的是企业在过去一年中获得的收入。这意味着,每增加价值1元的股东权益,公司就会产生0.14元的利润。
为什么净资产收益率对收益增长很重要?
到目前为止,我们已经了解到净资产收益率衡量的是一家公司创造利润的效率。根据公司将这些利润再投资或“保留”多少,以及这样做的效率如何,我们就能够评估一家公司的收益增长潜力。假设其他条件不变,净资产收益率和利润保留率越高,与不一定具有这些特征的公司相比,公司的增长率就越高。
宁波富达盈利增长与14%净资产收益率的并列比较
首先,宁波富达的净资产收益率看起来可以接受。特别是与9.8%的行业平均水平相比,该公司的净资产收益率看起来相当令人印象深刻。正如你可能预料到的,宁波富达公布的4.3%的净利润下降有点出人意料。我们认为,可能还有其他一些因素在阻碍该公司的增长。这些问题包括低收益留存或资本配置不善。
话虽如此,我们将宁波福达的业绩与行业进行了比较,当我们发现该公司在同期盈利缩水的同时,该行业的盈利却以21%的速度增长,这让我们感到担忧。
上海证券交易所:过去600724的收益增长2022年9月20日
盈利增长是评估一只股票时需要考虑的一个重要指标。投资者应该尝试确定预期的收益增长或下降是否已计入价格,无论是哪种情况。这样做将有助于他们确定该股的未来看起来是光明的还是不祥的。与其他公司相比,宁波福达的估值是否公平?这3个估值指标可能会帮助你做出决定。
宁波福达是否有效地将利润进行了再投资?
宁波富达的三年中值派息率高达68%(意味着32%的利润被保留),大部分利润都支付给了股东,这解释了该公司收益不断缩水的原因。由于只有一小部分再投资于该业务,盈利增长显然会很低或根本不存在。要了解我们为宁波富达确定的3个风险,请免费访问我们的风险仪表板。
此外,宁波富达在至少十年的时间里一直在发放股息,这表明,保持股息支付对管理层来说要重要得多,即使这是以牺牲业务增长为代价的。
结论
总体而言,我们认为宁波福达确实有一些积极的因素需要考虑。然而,我们失望地看到,尽管净资产收益率很高,但收益增长乏力。请记住,该公司将一小部分利润进行再投资,这意味着投资者没有从高回报率中获益。到目前为止,我们只是通过观察公司的基本面来了解公司过去的业绩。所以也许有必要检查一下免费 详细图表宁波富达过去的收益,以及收入和现金流,以更深入地了解公司的业绩。
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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。