KWG Living Group Holdings (HKG:3913) has had a great run on the share market with its stock up by a significant 100% over the last three months. Since the market usually pay for a company's long-term fundamentals, we decided to study the company's key performance indicators to see if they could be influencing the market. In this article, we decided to focus on KWG Living Group Holdings' ROE.
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. Put another way, it reveals the company's success at turning shareholder investments into profits.
View our latest analysis for KWG Living Group Holdings
How Do You Calculate Return On Equity?
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 KWG Living Group Holdings is:
18% = CN¥695m ÷ CN¥3.8b (Based on the trailing twelve months to June 2022).
The 'return' is the income the business earned over the last year. So, this means that for every HK$1 of its shareholder's investments, the company generates a profit of HK$0.18.
What Is The Relationship Between ROE And Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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. 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 KWG Living Group Holdings' Earnings Growth And 18% ROE
To begin with, KWG Living Group Holdings seems to have a respectable ROE. Further, the company's ROE compares quite favorably to the industry average of 6.8%. This certainly adds some context to KWG Living Group Holdings' exceptional 39% net income growth seen over the past five years. However, there could also be other causes behind this growth. Such as - high earnings retention or an efficient management in place.
Next, on comparing with the industry net income growth, we found that KWG Living Group Holdings' growth is quite high when compared to the industry average growth of 5.7% in the same period, which is great to see.
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). Doing so will help them establish if the stock's future looks promising or ominous. 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 KWG Living Group Holdings is trading on a high P/E or a low P/E, relative to its industry.
Is KWG Living Group Holdings Using Its Retained Earnings Effectively?
KWG Living Group Holdings has a three-year median payout ratio of 32% (where it is retaining 68% of its income) which is not too low or not too high. So it seems that KWG Living Group Holdings is reinvesting efficiently in a way that it sees impressive growth in its earnings (discussed above) and pays a dividend that's well covered.
While KWG Living Group Holdings has seen growth in its earnings, it only recently started to pay a dividend. It is most likely that the company decided to impress new and existing shareholders with a dividend. Based on the latest analysts' estimates, we found that the company's future payout ratio over the next three years is expected to hold steady at 29%. As a result, KWG Living Group Holdings' ROE is not expected to change by much either, which we inferred from the analyst estimate of 16% for future ROE.
Summary
Overall, we are quite pleased with KWG Living Group Holdings' performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. 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.
KWG Living Group Holdings(HKG:3913)は、過去3か月間に株式市場で株価が100%著しく上昇しており、市場は通常、企業の長期的な基本価値に価格を支払うため、私たちは企業の主要パフォーマンス指標を研究して、市場に影響を与えているかどうかを調べることにしました。この記事では、KWG Living Group HoldingsのROEに焦点を当てることにしました。
株主としては、株式をいかに効率的に再投資するかが重要な要素であり、その再投資によって企業がどの程度株主の投資を利益に転化しているかを示すROEは重要な指標であるとされています。ちなみに、株式市場は通常、企業の長期の基盤に対して購入意欲を示すので、KWG Living Group Holdingsが市場に与える影響を検証するために、同社の主要パフォーマンス指標に注目することにしました。この記事では、KWG Living Group HoldingsのROEに焦点を当てることにしました。
KWG Living Group Holdingsの最新分析を見る
ROEを計算するには?
ROEの計算式は以下のとおりです:
ROE = 当期純利益 ÷ 株主資本
したがって、上記の式に基づくと、KWG Living Group HoldingsのROEは次の通りです。
KWG Living Group HoldingsはROEが尊敬されるほどの良い数字であることがわかります。さらに、同社のROEは業種平均の6.8%に比べてかなり優れていることがわかります。これは、過去5年間に39%の純利益成長を達成したKWG Living Group Holdingsの優れたコンテキストを提供しています。ただし、この成長の背後には、利益留保が高いか、効率的な経営陣がいるかなどの理由がある可能性があります。
また、業界の合算収益成長と比較すると、KWG Living Group Holdingsの成長率はこの期間内の業界の平均成長率5.7%と比較してかなり高いことがわかります。
収益成長は株式評価にとって重要な要素です。市場が企業の予想される収益成長(または減少)を織り込んでいるかどうかを知ることは、株式の将来の見通しが有望であるか不吉であるかを判断するのに役立ちます。予想される収益成長の良い指標の1つは、P / E比率で、株式の価格を収益の見通しに基づいて決定する指標です。したがって、KWG Living Group Holdingsが業界に対して高いP / Eで取引しているか、低いP / Eで取引しているかを確認することができます。
KWG Living Group Holdingsが保留利益を効果的に活用しているか?
KWG Living Group Holdingsは、所得の68%を保留し、配当を行うといった、比較的高くも低くもない3年の中央配当比率を持っています。これは、KWG Living Group Holdingsが効率的に再投資して収益が向上し、十分にカバーされた配当を行うことを意味しています。
KWG Living Group Holdingsは、収益の成長を見せてきたものの、配当金を支払い始めたのは最近である。おそらく、同社は新規および既存の株主に配当を提供することで、株主に印象を与えることを決定したことが背景にある。最新のアナリストの予測によると、同社の将来の配当比率は29%にとどまる見込みであるため、KWG Living Group HoldingsのROEはほとんど変わらないと推測されています。
要約
KWG Living Group Holdingsの業績には非常に満足しています。特に、ビジネスに積極的に投資して高い利益率を上げたことが大きな収益成長につながっていることは素晴らしいことです。しかしながら、最新の業種アナリストの予測によると、同社の収益成長が減速することが予想されています。同社の将来の収益成長予測について詳しく知りたい場合は、この無料のアナリスト予測レポートを参照して詳細を確認してください。