Most readers would already be aware that Frontage Holdings' (HKG:1521) stock increased significantly by 45% over the past three months. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to study its financial indicators more closely to see if they had a hand to play in the recent price move. Specifically, we decided to study Frontage Holdings' ROE in this article.
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 other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
View our latest analysis for Frontage Holdings
How To 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 Frontage Holdings is:
5.9% = US$19m ÷ US$323m (Based on the trailing twelve months to December 2021).
The 'return' is the amount earned after tax over the last twelve months. Another way to think of that is that for every HK$1 worth of equity, the company was able to earn HK$0.06 in profit.
What Is The Relationship Between ROE And Earnings Growth?
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. 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.
Frontage Holdings' Earnings Growth And 5.9% ROE
On the face of it, Frontage Holdings' ROE is not much to talk about. Next, when compared to the average industry ROE of 11%, the company's ROE leaves us feeling even less enthusiastic. However, the moderate 15% net income growth seen by Frontage Holdings over the past five years is definitely a positive. So, the growth in the company's earnings could probably have been caused by other variables. For instance, the company has a low payout ratio or is being managed efficiently.
We then compared Frontage Holdings' net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 24% in the same period, which is a bit concerning.
SEHK:1521 Past Earnings Growth July 21st 2022
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. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Frontage Holdings is trading on a high P/E or a low P/E, relative to its industry.
Is Frontage Holdings Using Its Retained Earnings Effectively?
Given that Frontage Holdings doesn't pay any dividend to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.
Summary
On the whole, we do feel that Frontage Holdings has some positive attributes. Specifically, its fairly high earnings growth number, which no doubt was backed by the company's high earnings retention. Still, the low ROE means that all that reinvestment is not reaping a lot of benefit to the investors. That being so, the latest analyst forecasts show that the company will continue to see an expansion in its earnings. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page 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.
大多数读者应该已经知道,丰盛控股(HKG:1521)的股票在过去三个月里大幅上涨了45%。考虑到股价通常与公司的长期财务表现保持一致,我们决定更仔细地研究公司的财务指标,看看它们是否对最近的价格走势起到了作用。具体地说,我们决定在本文中研究Fronage Holdings的净资产收益率。
净资产收益率,即股本回报率,是评估一家公司从股东那里获得投资回报的有效程度的有用工具。换句话说,这是一个衡量公司股东提供的资本回报率的盈利比率。
查看我们对丰盛控股的最新分析
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,丰盛控股的净资产收益率为:
5.9%=1900万美元×3.23亿美元(基于截至2021年12月的12个月的往绩)。
“报税表”是过去12个月的税后收入。另一种说法是,该公司每持有价值1港元的股票,就能赚取0.06港元的利润。
净资产收益率与盈利增长之间有什么关系?
我们已经证实,净资产收益率是一家公司未来收益的有效盈利指标。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。假设其他条件相同,与没有相同特征的公司相比,拥有更高股本回报率和更高利润保留率的公司通常会有更高的增长率。
丰盛控股的盈利增长和5.9%的净资产收益率
从表面上看,Fronage Holdings的净资产收益率(ROE)没有太多可谈的。其次,与平均11%的行业净资产收益率相比,该公司的净资产收益率让我们感到更不热情。然而,Fronage Holdings在过去五年中看到的15%的净收入温和增长绝对是一个积极的因素。因此,该公司收益的增长可能是由其他变量造成的。例如,该公司的派息率较低或管理效率较高。
然后我们将前庭控股的净收入增长与行业进行了比较,发现该公司的增长数字低于同期24%的行业平均增长率,这有点令人担忧。
联交所:1521过去盈利增长2022年7月21日
盈利增长是评估一只股票时需要考虑的一个重要指标。投资者下一步需要确定的是,预期的收益增长是否已经计入了股价。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。衡量预期收益增长的一个很好的指标是市盈率,它根据一只股票的盈利前景决定市场愿意为其支付的价格。因此,你可能想要检查一下Fronage Holdings相对于其行业是高市盈率还是低市盈率。
前置控股是否有效地利用其留存收益?
鉴于前置控股不向股东支付任何股息,我们推断该公司一直在将所有利润再投资于增长业务。
摘要
总体而言,我们确实觉得Fronage Holdings有一些积极的属性。具体地说,它相当高的收益增长数字,这无疑得到了该公司高收益留存的支持。尽管如此,较低的净资产收益率意味着,所有这些再投资并没有给投资者带来很多好处。既然如此,最新的分析师预测显示,该公司的收益将继续增长。这些分析师的预期是基于对该行业的广泛预期,还是基于该公司的基本面?点击此处进入我们分析师对该公司的预测页面。
对这篇文章有什么反馈吗?担心内容吗? 保持联系直接与我们联系。或者,也可以给编辑组发电子邮件,地址是implywallst.com。
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。