It is hard to get excited after looking at Scholastic's (NASDAQ:SCHL) recent performance, when its stock has declined 22% over the past three months. However, stock prices are usually driven by a company's financials over the long term, which in this case look pretty respectable. Particularly, we will be paying attention to Scholastic's ROE today.
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. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
See our latest analysis for Scholastic
How Is ROE Calculated?
The formula for return on equity is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Scholastic is:
5.1% = US$60m ÷ US$1.2b (Based on the trailing twelve months to August 2022).
The 'return' is the profit over the last twelve months. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.05.
Why Is ROE Important For Earnings Growth?
So far, we've learned that ROE is a measure of a company's profitability. 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 Scholastic's Earnings Growth And 5.1% ROE
At first glance, Scholastic's ROE doesn't look very promising. Next, when compared to the average industry ROE of 14%, the company's ROE leaves us feeling even less enthusiastic. Scholastic was still able to see a decent net income growth of 16% over the past five years. So, there might be other aspects that are positively influencing the company's earnings growth. Such as - high earnings retention or an efficient management in place.
We then compared Scholastic's net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 3.9% in the same period.
NasdaqGS:SCHL Past Earnings Growth October 24th 2022
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Scholastic fairly valued compared to other companies? These 3 valuation measures might help you decide.
Is Scholastic Making Efficient Use Of Its Profits?
Scholastic has a healthy combination of a moderate three-year median payout ratio of 26% (or a retention ratio of 74%) and a respectable amount of growth in earnings as we saw above, meaning that the company has been making efficient use of its profits.
Additionally, Scholastic 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.
Conclusion
On the whole, we do feel that Scholastic has some positive attributes. Even in spite of the low rate of return, the company has posted impressive earnings growth as a result of reinvesting heavily into its business. While we won't completely dismiss the company, what we would do, is try to ascertain how risky the business is to make a more informed decision around the company. You can see the 1 risk we have identified for Scholastic 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.
看到納斯達克(Scholastic)(股票代碼:SCCL)最近的表現,很難感到興奮,其股價在過去三個月裏下跌了22%。然而,股價通常是由公司的長期財務狀況推動的,在這種情況下,財務狀況看起來相當不錯。特別是,我們今天將關注Scholastic的淨資產收益率(ROE)。
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。簡而言之,它是用來評估一家公司相對於其權益資本的盈利能力。
查看我們對Scholastic的最新分析
淨資產收益率是如何計算的?
這個股本回報率公式是:
股本回報率=(持續經營的)淨利潤?股東權益
因此,根據上面的公式,學術公司的淨資產收益率為:
5.1%=6000萬美元×12億美元(基於截至2022年8月的12個月的往績)。
“收益”是過去12個月的利潤。因此,這意味着股東每投資1美元,公司就會產生0.05美元的利潤。
為什麼淨資產收益率對收益增長很重要?
到目前為止,我們瞭解到淨資產收益率是衡量一家公司盈利能力的指標。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。
Scholastic盈利增長與5.1%淨資產收益率的並列比較
乍一看,Scholastic的淨資產收益率看起來並不是很有希望。其次,與14%的行業平均淨資產收益率相比,該公司的淨資產收益率讓我們感到更不熱情。在過去的五年裏,Scholastic仍然能夠看到16%的可觀的淨收入增長。因此,可能還有其他方面正在積極影響公司的收益增長。例如-高收益留存或有效的管理到位。
然後,我們將Scholastic的淨收入增長與行業進行了比較,我們很高興地看到,與同期3.9%的行業增長率相比,該公司的增長數字更高。
NasdaqGS:Schl過去的收益增長2022年10月24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。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)。通過這樣做,他們將知道股票是將進入清澈的藍色水域,還是等待沼澤水域。與其他公司相比,學術公司的價值是否公平?這3個估值指標可能會幫助你做出決定。
學術集團是否有效地利用了利潤?
正如我們上面看到的,Scholastic擁有26%的適度三年中值派息率(或74%的留存率)和可觀的收益增長的健康組合,這意味着該公司一直在有效地利用其利潤。
此外,Scholastic在至少十年的時間裏支付了股息,這意味着該公司非常認真地與股東分享利潤。
結論
總體而言,我們確實覺得Scholastic有一些積極的屬性。儘管回報率很低,但由於對業務進行了大量再投資,該公司實現了令人印象深刻的收益增長。雖然我們不會完全解僱這家公司,但我們要做的是努力確定這項業務在公司周圍做出更明智的決定的風險有多大。您可以通過訪問我們的風險控制面板在我們的平臺上是免費的。
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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。