With its stock down 23% over the past three months, it is easy to disregard Jiangsu Lopal Tech (SHSE:603906). However, a closer look at its sound financials might cause you to think again. Given that fundamentals usually drive long-term market outcomes, the company is worth looking at. Specifically, we decided to study Jiangsu Lopal Tech's ROE in this article.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
See our latest analysis for Jiangsu Lopal Tech
How Is ROE Calculated?
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 Lopal Tech is:
17% = CN¥883m ÷ CN¥5.3b (Based on the trailing twelve months to June 2022).
The 'return' is the profit over the last twelve months. Another way to think of that is that for every CN¥1 worth of equity, the company was able to earn CN¥0.17 in profit.
Why Is ROE Important For Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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 Jiangsu Lopal Tech's Earnings Growth And 17% ROE
To begin with, Jiangsu Lopal Tech seems to have a respectable ROE. Especially when compared to the industry average of 11% the company's ROE looks pretty impressive. This certainly adds some context to Jiangsu Lopal Tech's exceptional 41% net income growth seen over the past five years. However, there could also be other causes behind this growth. For instance, the company has a low payout ratio or is being managed efficiently.
Next, on comparing with the industry net income growth, we found that Jiangsu Lopal Tech's growth is quite high when compared to the industry average growth of 20% in the same period, which is great to see.
SHSE:603906 Past Earnings Growth October 25th 2022
Earnings growth is a huge factor in stock valuation. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. 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 Jiangsu Lopal Tech is trading on a high P/E or a low P/E, relative to its industry.
Is Jiangsu Lopal Tech Using Its Retained Earnings Effectively?
Jiangsu Lopal Tech's three-year median payout ratio to shareholders is 25%, which is quite low. This implies that the company is retaining 75% of its profits. This suggests that the management is reinvesting most of the profits to grow the business as evidenced by the growth seen by the company.
Moreover, Jiangsu Lopal Tech is determined to keep sharing its profits with shareholders which we infer from its long history of four years of paying a dividend.
Summary
Overall, we are quite pleased with Jiangsu Lopal Tech's performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. 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.
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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.
在过去的三个月里,江苏罗派科技的股价下跌了23%,人们很容易忽视江苏罗派科技(上交所:603906)。然而,仔细看看它稳健的财务状况可能会让你重新考虑。鉴于基本面因素通常会推动长期市场结果,该公司值得关注。具体地说,我们决定在本文中研究江苏罗派科技的净资产收益率。
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。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。
查看我们对江苏罗帕尔科技的最新分析
净资产收益率是如何计算的?
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,江苏罗帕尔科技的净资产收益率为:
17%=CN元8.83亿×CN元53亿元(基于截至2022年6月的12个月)。
“收益”是过去12个月的利润。另一种说法是,公司每持有价值1元的股权,就能赚取0.17元的利润。
为什么净资产收益率对收益增长很重要?
到目前为止,我们已经了解到净资产收益率衡量的是一家公司创造利润的效率。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。
江苏罗派科技盈利增长与净资产收益率17%的并列比较
首先,江苏罗帕尔科技似乎拥有令人尊敬的净资产收益率。特别是与11%的行业平均水平相比,该公司的净资产收益率(ROE)看起来相当令人印象深刻。这无疑为江苏罗帕尔科技在过去五年中41%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,该公司的派息率较低或管理效率较高。
接下来,对比行业净收入增长,我们发现江苏罗帕尔科技的增长与同期20%的行业平均增长相比是相当高的,这是非常可喜的。
上证综指:过去603906的收益增长2022年10月25日
盈利增长是股票估值的一个重要因素。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。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。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,你可能想看看江苏罗帕尔科技相对于其行业是高市盈率还是低市盈率。
江苏罗派科技是否有效地利用了其留存收益?
江苏罗帕尔科技对股东的三年派息率中值为25%,相当低。这意味着该公司将保留75%的利润。这表明管理层正在将大部分利润进行再投资,以实现业务增长,公司的增长就是明证。
此外,江苏罗帕尔科技决心继续与股东分享利润,这是我们从其支付股息的悠久历史中推断出来的。
摘要
总体而言,我们对江苏罗帕尔科技的表现相当满意。具体地说,我们喜欢该公司将一大笔利润以高回报率进行再投资。当然,这导致该公司的收益出现了大幅增长。话虽如此,最新的行业分析师预测显示,该公司的收益增长预计将放缓。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。
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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。