It is hard to get excited after looking at Synopsys' (NASDAQ:SNPS) recent performance, when its stock has declined 14% over the past month. However, stock prices are usually driven by a company's financial performance over the long term, which in this case looks quite promising. In this article, we decided to focus on Synopsys' 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 short, ROE shows the profit each dollar generates with respect to its shareholder investments.
Check out our latest analysis for Synopsys
How Is ROE Calculated?
The formula for return on equity is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Synopsys is:
18% = US$1.0b ÷ US$5.7b (Based on the trailing twelve months to July 2022).
The 'return' is the yearly profit. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.18.
Why Is ROE Important For 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.
A Side By Side comparison of Synopsys' Earnings Growth And 18% ROE
To start with, Synopsys' ROE looks acceptable. On comparing with the average industry ROE of 12% the company's ROE looks pretty remarkable. This certainly adds some context to Synopsys' exceptional 31% net income growth seen over the past five years. However, there could also be other causes behind this growth. Such as - high earnings retention or an efficient management in place.
Next, on comparing with the industry net income growth, we found that Synopsys' growth is quite high when compared to the industry average growth of 25% in the same period, which is great to see.
NasdaqGS:SNPS Past Earnings Growth September 23rd 2022
Earnings growth is a huge factor in stock valuation. 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. What is SNPS worth today? The intrinsic value infographic in our free research report helps visualize whether SNPS is currently mispriced by the market.
Is Synopsys Making Efficient Use Of Its Profits?
Synopsys 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.
Conclusion
In total, we are pretty happy with Synopsys' performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
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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.
看到新思科技(纳斯达克:SNPS)最近的表现,很难感到兴奋,它的股票在过去一个月里下跌了14%。然而,股价通常是由一家公司的长期财务表现推动的,在这种情况下,这看起来相当有希望。在本文中,我们决定将重点放在Synopsys的ROE上。
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。简而言之,净资产收益率显示了每一美元相对于其股东投资产生的利润。
查看我们对Synopsys的最新分析
净资产收益率是如何计算的?
这个股本回报率公式是:
股本回报率=(持续经营的)净利润?股东权益
因此,根据上面的公式,Synopsys的ROE为:
18%=10亿美元×57亿美元(基于截至2022年7月的12个月的往绩)。
“回报”就是年度利润。因此,这意味着股东每投资1美元,公司就会产生0.18美元的利润。
为什么净资产收益率对收益增长很重要?
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。
Synopsys盈利增长与18%净资产收益率的并列比较
首先,Synopsys的净资产收益率看起来还可以接受。与12%的行业平均净资产收益率相比,该公司的净资产收益率看起来相当惊人。这无疑为Synopsys在过去五年中31%的净利润增长提供了一些背景。然而,这种增长背后也可能有其他原因。例如-高收益留存或有效的管理到位。
接下来,对比行业净收入增长,我们发现,与同期25%的行业平均增长相比,Synopsys的增长相当高,这是令人欣喜的。
NasdaqGS:SNPs过去的收益增长2022年9月23日
盈利增长是股票估值的一个重要因素。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。今天,SNPs的价值是多少?我们免费研究报告中的内在价值信息图有助于直观地了解SNPs目前是否被市场错误定价。
Synopsys是否在有效利用其利润?
Synopsys目前不支付任何股息,这实际上意味着它一直在将所有利润再投资于该业务。这无疑是我们上面讨论的高收益增长数字的原因。
结论
总体而言,我们对Synopsys的表现相当满意。特别是,很高兴看到该公司在业务上投入了大量资金,并获得了高回报率,这导致了其收益的可观增长。既然如此,一项对最新分析师预测的研究表明,预计该公司未来的收益增长将放缓。要了解更多分析师对该公司的最新预测,请查看分析师对该公司预测的可视化。
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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。