Shenwu Energy Saving (SZSE:000820) has had a great run on the share market with its stock up by a significant 19% over the last month. 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. In this article, we decided to focus on Shenwu Energy Saving's ROE.
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.
See our latest analysis for Shenwu Energy Saving
How Do You Calculate Return On Equity?
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Shenwu Energy Saving is:
14% = CN¥18m ÷ CN¥130m (Based on the trailing twelve months to September 2022).
The 'return' is the profit over the last twelve months. So, this means that for every CN¥1 of its shareholder's investments, the company generates a profit of CN¥0.14.
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 all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.
Shenwu Energy Saving's Earnings Growth And 14% ROE
To start with, Shenwu Energy Saving's ROE looks acceptable. Further, the company's ROE compares quite favorably to the industry average of 7.5%. This probably laid the ground for Shenwu Energy Saving's significant 26% net income growth seen over the past five years. However, there could also be other causes behind this growth. For instance, the company has a low payout ratio or is being managed efficiently.
Next, on comparing with the industry net income growth, we found that Shenwu Energy Saving's growth is quite high when compared to the industry average growth of 10% in the same period, which is great to see.
SZSE:000820 Past Earnings Growth November 25th 2022
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. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. If you're wondering about Shenwu Energy Saving's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
Is Shenwu Energy Saving Using Its Retained Earnings Effectively?
Shenwu Energy Saving doesn't pay any dividend currently which essentially means that it has been reinvesting all of its profits into the business. This definitely contributes to the high earnings growth number that we discussed above.
Summary
In total, we are pretty happy with Shenwu Energy Saving's performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. If the company continues to grow its earnings the way it has, that could have a positive impact on its share price given how earnings per share influence long-term share prices. Not to forget, share price outcomes are also dependent on the potential risks a company may face. So it is important for investors to be aware of the risks involved in the business. To know the 3 risks we have identified for Shenwu Energy Saving visit our risks dashboard for free.
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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.
神霧節能(深圳證券交易所股票代碼：000820)在過去一個月中股價大幅上漲了19%。由於市場通常為公司的長期基本面買單，我們決定研究公司的關鍵業績指標，看看它們是否會影響市場。在本文中，我們決定關注神武節能的淨資產收益率。
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。簡而言之，淨資產收益率顯示了每一美元相對於其股東投資產生的利潤。
查看我們對神霧節能的最新分析
你如何計算股本回報率？
這個淨資產收益率公式是：
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，神武節能的淨資產收益率為：
14%=CN元1800萬×CN元1.3億元(基於截至2022年9月的12個月)。
“收益”是過去12個月的利潤。因此，這意味着股東每投資1元人民幣，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。假設其他條件相同，與沒有相同特徵的公司相比，擁有更高股本回報率和更高利潤保留率的公司通常會有更高的增長率。
神霧節能盈利增長14%淨資產收益率
首先，神霧節能的淨資產收益率看起來可以接受。此外，該公司的淨資產收益率(ROE)與7.5%的行業平均水平相比相當有利。這可能為神霧節能在過去五年中實現26%的淨收入大幅增長奠定了基礎。然而，這種增長背後也可能有其他原因。例如，該公司的派息率較低或管理效率較高。
接下來，對比行業淨收入增長，我們發現神霧節能的增長與同期10%的行業平均增長相比相當高，這是令人欣喜的。
深圳證交所：過去000820的收益增長2022年11月25日
盈利增長是股票估值的一個重要因素。投資者下一步需要確定的是，預期的收益增長是否已經計入了股價。通過這樣做，他們將知道股票是將進入清澈的藍色水域，還是等待沼澤水域。如果你想知道神霧節能的估值，看看它的市盈率指標，看看它與行業的對比。
神霧節能有效利用留存收益嗎？
神霧節能目前不支付任何股息，這實質上意味着它一直在將所有利潤再投資於該業務。這無疑是我們上面討論的高收益增長數字的原因。
摘要
總體而言，我們對神武節能的表現相當滿意。具體地説，我們喜歡該公司將一大筆利潤以高回報率進行再投資。當然，這導致該公司的收益出現了大幅增長。如果該公司繼續以目前的方式增長收益，考慮到每股收益對長期股價的影響，這可能會對其股價產生積極影響。別忘了，股價結果還取決於一家公司可能面臨的潛在風險。因此，投資者意識到這項業務所涉及的風險很重要。要了解我們為神霧節能確定的3個風險，請免費訪問我們的風險儀錶板。
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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。
