Montage Technology Co., Ltd.'s (SHSE:688008) Stock Is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?
Montage Technology Co., Ltd.'s (SHSE:688008) Stock Is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?
Most readers would already be aware that Montage Technology's (SHSE:688008) stock increased significantly by 38% over the past three months. However, we decided to pay attention to the company's fundamentals which don't appear to give a clear sign about the company's financial health. Specifically, we decided to study Montage Technology's ROE in this article.
許多讀者已經知道瀾起科技(SHSE:688008)的股票在過去三個月內大幅上漲了38%。 但是,我們決定關注該公司的基本面,這些基本面似乎沒有清晰的跡象表明該公司的財務狀況。 具體而言,我們決定在本文中研究瀾起科技的ROE。
ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.
roe指股東權益回報率,是一種有用的工具,用於評估公司如何有效地從股東獲得的投資中產生回報。簡單來說,這衡量了一家公司相對於股東權益的盈利能力。
How Do You Calculate Return On Equity?
怎樣計算ROE?
Return on equity can be calculated by using the formula:
股東權益報酬率可以使用以下公式計算:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
淨資產收益率 = 淨利潤(從持續經營中獲得)÷ 股東權益
So, based on the above formula, the ROE for Montage Technology is:
所以,根據上述公式,瀾起科技的ROE爲:
6.4% = CN¥655m ÷ CN¥10b (Based on the trailing twelve months to March 2024).
6.4%=CN¥65500萬元÷CN¥100億(基於截至2024年3月的過去十二個月)。
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¥0.06.
「回報」是指過去十二個月的利潤。這意味着對於每1元投資,公司可以產生CN¥0.06的利潤。
What Has ROE Got To Do With Earnings Growth?
roe與盈利增長有何關係?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. 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.
到目前爲止,我們已經了解到ROE衡量了公司創造利潤的效率。現在我們需要評估公司爲未來增長「保留」的利潤量,然後我們就能了解公司的增長潛力。如果一切都相等,那麼ROE和利潤保留都更高的公司通常比沒有這些特徵的公司增長率更高。
Montage Technology's Earnings Growth And 6.4% ROE
儘管瀾起科技的正常三年中位數支付比率爲41%(即保留比率爲59%),但其收益下降的事實令人困惑。因此,可能有其他因素阻礙了增長。例如,該業務面臨了一些困難。
On the face of it, Montage Technology's ROE is not much to talk about. However, given that the company's ROE is similar to the average industry ROE of 5.8%, we may spare it some thought. But Montage Technology saw a five year net income decline of 4.1% over the past five years. Bear in mind, the company does have a slightly low ROE. So that's what might be causing earnings growth to shrink.
However, when we compared Montage Technology's growth with the industry we found that while the company's earnings have been shrinking, the industry has seen an earnings growth of 20% in the same period. This is quite worrisome.
In addition, Montage Technology has been paying dividends over a period of four years suggesting that keeping up dividend payments is preferred by the management even though earnings have been in decline. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 38% of its profits over the next three years. However, Montage Technology's ROE is predicted to rise to 17% despite there being no anticipated change in its payout ratio.
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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. 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 Montage Technology's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
Is Montage Technology Using Its Retained Earnings Effectively?
瀾起科技是否有效地利用其留存收益?
In spite of a normal three-year median payout ratio of 41% (that is, a retention ratio of 59%), the fact that Montage Technology's earnings have shrunk is quite puzzling. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds.
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.
In addition, Montage Technology has been paying dividends over a period of four years suggesting that keeping up dividend payments is preferred by the management even though earnings have been in decline. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 38% of its profits over the next three years. However, Montage Technology's ROE is predicted to rise to 17% despite there being no anticipated change in its payout ratio.
此外,瀾起科技已經連續四年支付股息,表明儘管盈利已經下降,管理層仍然喜歡保持分紅。 在研究最新的分析師共識數據時,我們發現該公司預計在未來三年內將繼續支付大約38%的利潤。 但是,儘管沒有預期的變化之類的變化,預計瀾起科技的ROE將上升至17%。
Conclusion
結論
In total, we're a bit ambivalent about Montage Technology's performance. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future. 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.
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.
對本文有任何反饋?對內容有任何疑慮?請直接與我們聯繫。或者,發送電子郵件至editorial-team@simplywallst.com。
這篇文章是Simply Wall St的一般性文章。我們根據歷史數據和分析師預測提供評論,只使用公正的方法論,我們的文章並不意味着提供任何金融建議。文章不構成買賣任何股票的建議,也不考慮您的目標或您的財務狀況。我們的目標是帶給您基本數據驅動的長期關注分析。請注意,我們的分析可能不考慮最新的價格敏感公司公告或定性材料。Simply Wall St沒有任何股票頭寸。
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
對本文有任何反饋?對內容有任何疑慮?請直接與我們聯繫。或者,發送電子郵件至editorial-team@simplywallst.com。