It is hard to get excited after looking at Jiangsu Fengshan GroupLtd's (SHSE:603810) recent performance, when its stock has declined 18% over the past week. It seems that the market might have completely ignored the positive aspects of the company's fundamentals and decided to weigh-in more on the negative aspects. Fundamentals usually dictate market outcomes so it makes sense to study the company's financials. Particularly, we will be paying attention to Jiangsu Fengshan GroupLtd's ROE today.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
See our latest analysis for Jiangsu Fengshan GroupLtd
How Do You Calculate Return On Equity?
ROE 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 Jiangsu Fengshan GroupLtd is:
7.2% = CN¥106m ÷ CN¥1.5b (Based on the trailing twelve months to June 2022).
The 'return' is the yearly profit. So, this means that for every CN¥1 of its shareholder's investments, the company generates a profit of CN¥0.07.
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.
Jiangsu Fengshan GroupLtd's Earnings Growth And 7.2% ROE
When you first look at it, Jiangsu Fengshan GroupLtd's ROE doesn't look that attractive. A quick further study shows that the company's ROE doesn't compare favorably to the industry average of 11% either. Thus, the low net income growth of 3.0% seen by Jiangsu Fengshan GroupLtd over the past five years could probably be the result of the low ROE.
Next, on comparing with the industry net income growth, we found that Jiangsu Fengshan GroupLtd's reported growth was lower than the industry growth of 19% in the same period, which is not something we like to see.
SHSE:603810 Past Earnings Growth September 29th 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. 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 Jiangsu Fengshan GroupLtd's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
Is Jiangsu Fengshan GroupLtd Efficiently Re-investing Its Profits?
Despite having a normal three-year median payout ratio of 28% (or a retention ratio of 72% over the past three years, Jiangsu Fengshan GroupLtd has seen very little growth in earnings as we saw above. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds.
In addition, Jiangsu Fengshan GroupLtd has been paying dividends over a period of three years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth.
Conclusion
Overall, we have mixed feelings about Jiangsu Fengshan GroupLtd. While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. You can see the 2 risks we have identified for Jiangsu Fengshan GroupLtd by visiting our risks dashboard for free on our platform here.
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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.
看了江苏凤山集团(上海证券交易所股票代码:603810)最近的表现,它的股票在过去一周里下跌了18%,很难让人兴奋。市场似乎完全忽视了该公司基本面的积极方面,而决定更多地关注负面方面。基本面通常决定市场结果,因此研究该公司的财务状况是有意义的。今天我们特别关注江苏凤山集团的净资产收益率。
股本回报率(ROE)是用来评估公司管理层利用公司资本效率的关键指标。简而言之,它是用来评估一家公司相对于其权益资本的盈利能力。
查看我们对江苏凤山集团有限公司的最新分析
你如何计算股本回报率?
可使用以下公式计算净资产收益率:
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,江苏凤山集团有限公司的净资产收益率为:
7.2%=CN元1.06亿×CN元15亿元(以截至2022年6月的12个月为基础)。
“回报”就是年度利润。因此,这意味着股东每投资1元人民币,公司就会产生0.07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。
江苏凤山集团盈利增长7.2%净资产收益率
乍一看,江苏凤山集团的净资产收益率(ROE)看起来并不那么吸引人。一项快速的进一步研究显示,该公司的净资产收益率(ROE)也不及11%的行业平均水平。因此,江苏凤山集团过去五年3.0%的低净收入增长可能是低ROE的结果。
接下来,通过与行业净收入增长进行比较,我们发现江苏凤山集团的报告增长低于同期行业19%的增长,这是我们不愿意看到的。
上证综指:过去收益增长603810 2022年9月29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。通过这样做,他们将知道股票是将进入清澈的蓝色水域,还是等待沼泽水域。如果你想知道江苏凤山集团有限公司的估值,看看这个衡量其市盈率的指标,与其行业相比。
江苏凤山集团有限公司是否有效地将利润进行了再投资?
尽管过去三年的正常三年中值派息率为28%(或过去三年的留存率为72%),但如上所述,江苏凤山集团的收益增长很小。因此,可能还有其他因素在起作用,可能会阻碍经济增长。例如,该业务一直面临一些不利因素。
此外,江苏凤山集团有限公司在三年的时间里一直在发放股息,这表明保持股息支付对管理层来说要重要得多,即使这是以业务增长为代价的。
结论
总体而言,我们对江苏凤山集团有限公司的感受复杂。虽然该公司的再投资率确实很高,但低ROE意味着所有的再投资都没有给投资者带来任何好处,而且对收益增长产生了负面影响。总而言之,我们将谨慎对待这家公司,其中一种方法是查看业务的风险概况。您可以通过访问我们的网站查看我们为江苏凤山集团有限公司确定的两个风险风险控制面板在我们的平台上是免费的。
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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。