Dollar Tree (NASDAQ:DLTR) has had a rough three months with its share price down 10%. However, stock prices are usually driven by a company's financial performance over the long term, which in this case looks quite promising. Particularly, we will be paying attention to Dollar Tree's ROE today.
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.
Check out our latest analysis for Dollar Tree
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 Dollar Tree is:
19% = US$1.6b ÷ US$8.4b (Based on the trailing twelve months to July 2022).
The 'return' is the amount earned after tax over the last twelve months. That means that for every $1 worth of shareholders' equity, the company generated $0.19 in profit.
What Has ROE Got To Do With Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. 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 Dollar Tree's Earnings Growth And 19% ROE
To start with, Dollar Tree's ROE looks acceptable. Even so, when compared with the average industry ROE of 34%, we aren't very excited. However, the moderate 11% net income growth seen by Dollar Tree over the past five years is definitely a positive. Therefore, the growth in earnings could probably have been caused by other variables. For example, it is possible that the company's management has made some good strategic decisions, or that the company has a low payout ratio. Bear in mind, the company does have a respectable level of ROE. It is just that the industry ROE is higher. So this also provides some context to the earnings growth seen by the company.
Next, on comparing Dollar Tree's net income growth with the industry, we found that the company's reported growth is similar to the industry average growth rate of 11% in the same period.
NasdaqGS:DLTR Past Earnings Growth September 26th 2022
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. 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. Has the market priced in the future outlook for DLTR? You can find out in our latest intrinsic value infographic research report.
Is Dollar Tree Making Efficient Use Of Its Profits?
Dollar Tree 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 decent earnings growth number that we discussed above.
Conclusion
In total, we are pretty happy with Dollar Tree's performance. Specifically, we like that it has been reinvesting a high portion of its profits at a moderate rate of return, resulting in earnings expansion. We also studied the latest analyst forecasts and found that the company's earnings growth is expected be similar to its current growth rate. 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.
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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.
納斯達克(DLTR)經歷了艱難的三個月,股價下跌了10%。然而,股價通常是由一家公司的長期財務表現推動的,在這種情況下,這看起來相當有希望。特別是,我們今天將關注Dollar Tree的ROE。
股本回報率或淨資產收益率是股東要考慮的一個重要因素,因為它告訴他們他們的資本再投資的效率。簡而言之,淨資產收益率顯示了每一美元相對於其股東投資產生的利潤。
查看我們對美元樹的最新分析
淨資產收益率是如何計算的?
可使用以下公式計算淨資產收益率:
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,美元樹的淨資產收益率為:
19%=16億美元×84億美元(基於截至2022年7月的12個月的往績)。
“報税表”是過去12個月的税後收入。這意味着,股東權益每增加1美元,公司就會產生0.19美元的利潤。
淨資產收益率與盈利增長有什麼關係?
到目前為止,我們已經瞭解到淨資產收益率衡量的是一家公司創造利潤的效率。根據公司選擇再投資或“保留”多少利潤,我們就能夠評估一家公司未來產生利潤的能力。假設其他條件相同,與沒有相同特徵的公司相比,擁有更高股本回報率和更高利潤保留率的公司通常會有更高的增長率。
美元樹盈利增長與19%淨資產收益率的並列比較
首先,Dollar Tree的淨資產收益率看起來還可以接受。即便如此,與34%的行業平均ROE相比,我們並不是很興奮。然而,Dollar Tree在過去五年中看到的11%的適度淨收入增長肯定是積極的。因此,收益的增長可能是由其他變量造成的。例如,公司管理層可能做出了一些良好的戰略決策,或者公司的派息率較低。請記住,該公司確實有相當高的淨資產收益率水平。只是行業的淨資產收益率更高。因此,這也為該公司看到的收益增長提供了一些背景。
接下來,對比美元樹的淨收入增長與行業,我們發現,該公司公佈的增長與同期11%的行業平均增長率相似。
NasdaqGS:DLTR過去的收益增長2022年9月26日
賦予一家公司價值的基礎在很大程度上與其盈利增長掛鈎。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。這樣做將有助於他們確定該股的未來看起來是光明的還是不祥的。市場是否已經消化了DLTR的未來前景?你可以在我們最新的內在價值信息圖研究報告中找到答案。
美元樹是否有效地利用了它的利潤?
美元樹目前不支付任何股息,這實質上意味着它一直在將所有利潤再投資於該業務。這無疑有助於我們上面討論的可觀的收益增長數字。
結論
總體而言,我們對Dollar Tree的表現相當滿意。具體地説,我們喜歡它一直在以適度的回報率將高比例利潤進行再投資,導致收益擴大。我們還研究了最新的分析師預測,發現該公司的收益增長預計將與目前的增長速度相似。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。
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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。