With its stock down 23% over the past three months, it is easy to disregard Kingsoft (HKG:3888). 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. Particularly, we will be paying attention to Kingsoft's ROE today.
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.
See our latest analysis for Kingsoft
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 Kingsoft is:
2.9% = CN¥839m ÷ CN¥29b (Based on the trailing twelve months to June 2022).
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$0.03 in profit.
What Has ROE Got To Do With 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 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 Kingsoft's Earnings Growth And 2.9% ROE
As you can see, Kingsoft's ROE looks pretty weak. Even when compared to the industry average of 11%, the ROE figure is pretty disappointing. Kingsoft was still able to see a decent net income growth of 6.7% over the past five years. We reckon that there could be other factors at play here. For instance, the company has a low payout ratio or is being managed efficiently.
We then compared Kingsoft's net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 31% in the same period, which is a bit concerning.
SEHK:3888 Past Earnings Growth September 21st 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. This then helps them determine if the stock is placed for a bright or bleak future. 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 Kingsoft is trading on a high P/E or a low P/E, relative to its industry.
Is Kingsoft Using Its Retained Earnings Effectively?
In Kingsoft's case, its respectable earnings growth can probably be explained by its low three-year median payout ratio of 20% (or a retention ratio of 80%), which suggests that the company is investing most of its profits to grow its business.
Additionally, Kingsoft has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 20% of its profits over the next three years. However, Kingsoft's ROE is predicted to rise to 5.1% despite there being no anticipated change in its payout ratio.
Conclusion
On the whole, we do feel that Kingsoft has some positive attributes. That is, a decent growth in earnings backed by a high rate of reinvestment. However, we do feel that that earnings growth could have been higher if the business were to improve on the low ROE rate. Especially given how the company is reinvesting a huge chunk of its profits. Having said that, looking at the current analyst estimates, we found that the company's earnings are expected to gain momentum. 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.
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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.
金山软件(HKG:3888)的股价在过去三个月里下跌了23%,人们很容易忽视它。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。尤其今天我们会关注金山软件的净资产收益率。
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。简而言之,它衡量的是一家公司相对于股东权益的盈利能力。
查看我们对金山软件的最新分析
你如何计算股本回报率?
这个净资产收益率公式是:
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,金山软件的净资产收益率为:
2.9%=8.39亿元×290亿元(以截至2022年6月的12个月为基础)。
“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0.03港元的利润。
净资产收益率与盈利增长有什么关系?
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。
金山软件盈利增长与净资产收益率2.9%的并列比较
如你所见,金山软件的净资产收益率(ROE)看起来相当弱。即使与11%的行业平均水平相比,净资产收益率数字也相当令人失望。金山软件在过去五年的净收入仍有6.7%的可观增长。我们认为,可能还有其他因素在起作用。例如,该公司的派息率较低或管理效率较高。
然后我们将金山软件的净收入增长与行业进行比较,发现该公司的增长数字低于同期行业平均31%的增长率,这有点令人担忧。
联交所:3888过去盈利增长2022年9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。这有助于他们确定这只股票是为光明还是黯淡的未来做准备。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,你可能想看看金山软件相对于其行业是高市盈率还是低市盈率。
金山软件是否有效地利用了其留存收益?
在金山软件的案例中,其可观的收益增长可能可以解释为其较低的三年中值派息率为20%(或留存比率为80%),这表明该公司正在将大部分利润用于增长业务。
此外,金山软件至少在十年内派发了股息,这意味着该公司对与股东分享利润相当认真。在研究了最新的分析师共识数据后,我们发现,预计该公司将在未来三年继续支付约20%的利润。然而,金山软件的净资产收益率预计将上升至5.1%,尽管其派息率没有预期的变化。
结论
总体而言,我们确实觉得金山软件有一些积极的属性。也就是说,在高再投资率的支持下,收益实现了可观的增长。然而,我们确实认为,如果业务在低净资产收益率的基础上有所改善,收益增长可能会更高。尤其是考虑到该公司正在对其利润的一大部分进行再投资。话虽如此,但从目前分析师的预估来看,我们发现该公司的盈利势头有望增强。要了解更多有关该公司未来收益增长预测的信息,请查看以下内容免费报告分析师对该公司的预测,以了解更多信息。
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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。