With its stock down 18% over the past three months, it is easy to disregard EC Healthcare (HKG:2138). However, the company's fundamentals look pretty decent, and long-term financials are usually aligned with future market price movements. In this article, we decided to focus on EC Healthcare's 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 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 EC Healthcare
How Is ROE Calculated?
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for EC Healthcare is:
12% = HK$271m ÷ HK$2.4b (Based on the trailing twelve months to March 2022).
The 'return' is the yearly profit. One way to conceptualize this is that for each HK$1 of shareholders' capital it has, the company made HK$0.12 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. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don't share these attributes.
EC Healthcare's Earnings Growth And 12% ROE
At first glance, EC Healthcare seems to have a decent ROE. Further, the company's ROE is similar to the industry average of 11%. As you might expect, the 4.2% net income decline reported by EC Healthcare is a bit of a surprise. So, there might be some other aspects that could explain this. Such as, the company pays out a huge portion of its earnings as dividends, or is faced with competitive pressures.
So, as a next step, we compared EC Healthcare's performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 14% in the same period.
SEHK:2138 Past Earnings Growth August 15th 2022
Earnings growth is a huge factor in stock valuation. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). 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 EC Healthcare is trading on a high P/E or a low P/E, relative to its industry.
Is EC Healthcare Efficiently Re-investing Its Profits?
With a high three-year median payout ratio of 81% (implying that 19% of the profits are retained), most of EC Healthcare's profits are being paid to shareholders, which explains the company's shrinking earnings. With only a little being reinvested into the business, earnings growth would obviously be low or non-existent.
In addition, EC Healthcare has been paying dividends over a period of six years suggesting that keeping up dividend payments is preferred by the management even though earnings have been in decline. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 74% of its profits over the next three years. However, EC Healthcare's ROE is predicted to rise to 31% despite there being no anticipated change in its payout ratio.
Conclusion
On the whole, we do feel that EC Healthcare has some positive attributes. However, while the company does have a high ROE, its earnings growth number is quite disappointing. This can be blamed on the fact that it reinvests only a small portion of its profits and pays out the rest as dividends. Having said that, looking at current analyst estimates, we found that the company's earnings growth rate is expected to see a huge improvement. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts 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.
在過去三個月其股價下跌18%的情況下,很容易忽視EC Healthcare(HKG:2138)。然而,該公司的基本面看起來相當不錯,長期財務狀況通常與未來的市場價格走勢保持一致。在本文中,我們決定將重點放在EC Healthcare的ROE上。
淨資產收益率,即股本回報率,是評估一家公司從股東那裏獲得投資回報的有效程度的有用工具。換句話説,這是一個衡量公司股東提供的資本回報率的盈利比率。
查看我們對EC Healthcare的最新分析
淨資產收益率是如何計算的?
這個淨資產收益率公式是:
股本回報率=(持續經營的)淨利潤?股東權益
因此,根據上述公式,EC Healthcare的ROE為:
12%=2.71億港元×24億港元(根據截至2022年3月的過去12個月計算)。
“回報”就是年度利潤。一種將其概念化的方法是,公司每持有1港元的股東資本,就能獲得0.12港元的利潤。
淨資產收益率與盈利增長之間有什麼關係?
我們已經證實,淨資產收益率是一家公司未來收益的有效盈利指標。我們現在需要評估公司將多少利潤再投資或“保留”用於未來的增長,這就讓我們對公司的增長潛力有了一個瞭解。一般來説,在其他條件相同的情況下,股本回報率和利潤留存較高的公司比不具備這些特徵的公司有更高的增長率。
EC Healthcare的收益增長和12%的淨資產收益率
乍一看,EC Healthcare似乎有不錯的淨資產回報率。此外,該公司的淨資產收益率(ROE)接近11%的行業平均水平。正如你可能預期的那樣,EC Healthcare報告的4.2%的淨收入下降有點令人驚訝。因此,可能還有其他一些方面可以解釋這一點。例如,公司將很大一部分收益作為股息支付,或者面臨競爭壓力。
因此,作為下一步,我們將EC Healthcare的表現與行業進行了比較,並失望地發現,儘管該公司的收益一直在萎縮,但該行業在同一時期的收益一直以14%的速度增長。
聯交所:2138過去盈利增長2022年8月15日
盈利增長是股票估值的一個重要因素。對於投資者來説,重要的是知道市場是否已經消化了公司預期的收益增長(或下降)。這有助於他們確定這隻股票是為光明還是黯淡的未來做準備。衡量預期收益增長的一個很好的指標是市盈率,它根據一隻股票的盈利前景決定市場願意為其支付的價格。因此,你可能想要檢查EC Healthcare相對於其行業是高市盈率還是低市盈率。
EC Healthcare是否有效地對其利潤進行了再投資?
EC Healthcare的三年中值派息率高達81%(意味着保留了19%的利潤),大部分利潤都支付給了股東,這解釋了該公司收益不斷縮水的原因。由於只有一小部分再投資於該業務,盈利增長顯然會很低或根本不存在。
此外,EC Healthcare在六年的時間裏一直在支付股息,這表明儘管收益一直在下降,但管理層更傾向於繼續支付股息。在研究了最新的分析師共識數據後,我們發現,預計該公司將在未來三年繼續支付約74%的利潤。然而,EC Healthcare的淨資產收益率預計將上升至31%,儘管其派息率沒有預期的變化。
結論
總體而言,我們確實覺得EC Healthcare有一些積極的屬性。然而,儘管該公司的淨資產收益率(ROE)確實很高,但其收益增長數字卻相當令人失望。這可以歸咎於它只將一小部分利潤進行再投資,其餘部分作為股息支付。話雖如此,看看目前分析師的預估,我們發現該公司的盈利增長率預計將出現巨大改善。要了解更多分析師對該公司的最新預測,請查看分析師對該公司預測的可視化。
對這篇文章有什麼反饋嗎?擔心內容嗎? 保持聯繫直接與我們聯繫。或者,也可以給編輯組發電子郵件,地址是implywallst.com。
本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。