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.
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.
金山軟件(HKG:3888)的股價在過去三個月裏下跌了23%,人們很容易忽視它。但如果你密切關注,你可能會發現,該公司的關鍵財務指標看起來相當不錯,這可能意味着,鑑於市場通常會獎勵更具彈性的長期基本面因素,該股可能會在長期內上漲。尤其今天我們會關注金山軟件的淨資產收益率。
股本回報率(ROE)是對一家公司增值和管理投資者資金的效率的測試。簡而言之,它衡量的是一家公司相對於股東權益的盈利能力。
查看我們對金山軟件的最新分析
你如何計算股本回報率?
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,金山軟件的淨資產收益率為:
2.9%=8.39億元×290億元(以截至2022年6月的12個月為基礎)。
“報税表”是過去12個月的税後收入。另一種説法是,該公司每持有價值1港元的股票,就能賺取0.03港元的利潤。
淨資產收益率與盈利增長有什麼關係?
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。根據公司將這些利潤再投資或“保留”多少,以及這樣做的效率如何,我們就能夠評估一家公司的收益增長潛力。假設其他條件不變,淨資產收益率和利潤保留率越高,與不一定具有這些特徵的公司相比,公司的增長率就越高。
金山軟件盈利增長與淨資產收益率2.9%的並列比較
如你所見,金山軟件的淨資產收益率(ROE)看起來相當弱。即使與11%的行業平均水平相比,淨資產收益率數字也相當令人失望。金山軟件在過去五年的淨收入仍有6.7%的可觀增長。我們認為,可能還有其他因素在起作用。例如,該公司的派息率較低或管理效率較高。
然後我們將金山軟件的淨收入增長與行業進行比較,發現該公司的增長數字低於同期行業平均31%的增長率,這有點令人擔憂。
聯交所:3888過去盈利增長2022年9月21日
盈利增長是評估一隻股票時需要考慮的一個重要指標。投資者應該嘗試確定預期的收益增長或下降是否已計入價格,無論是哪種情況。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,你可能想看看金山軟件相對於其行業是高市盈率還是低市盈率。
金山軟件是否有效地利用了其留存收益?
在金山軟件的案例中,其可觀的收益增長可能可以解釋為其較低的三年中值派息率為20%(或留存比率為80%),這表明該公司正在將大部分利潤用於增長業務。
此外,金山軟件至少在十年內派發了股息,這意味着該公司對與股東分享利潤相當認真。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20%的利潤。然而,金山軟件的淨資產收益率預計將上升至5.1%,儘管其派息率沒有預期的變化。
結論
總體而言,我們確實覺得金山軟件有一些積極的屬性。也就是説,在高再投資率的支持下,收益實現了可觀的增長。然而,我們確實認為,如果業務在低淨資產收益率的基礎上有所改善,收益增長可能會更高。尤其是考慮到該公司正在對其利潤的一大部分進行再投資。話雖如此,但從目前分析師的預估來看,我們發現該公司的盈利勢頭有望增強。要了解更多有關該公司未來收益增長預測的信息,請查看以下內容免費報告分析師對該公司的預測,以瞭解更多信息。
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。