[ad_1]
It’s hard to get excited about Gallant Ventures (SGX:5IG)’s recent performance, with its share price down 1.5% over the past three months. However, the company’s fundamentals appear to be fairly decent, and its long-term financial position is generally in line with future market price movements. Specifically, in this article we decided to examine his ROE for Gallant Venture.
Return on equity or ROE is an important factor to be considered by a shareholder as it indicates how effectively their capital is being reinvested. In other words, this reveals that the company has been successful in turning shareholder investments into profits.
Check out our latest analysis for Gallant Venture.
How is ROE calculated?
of Formula for calculating return on equity teeth:
Return on equity = Net income (from continuing operations) ÷ Shareholders’ equity
So, based on the above formula, Gallant Venture’s ROE is:
0.5% = S$4.3 million ÷ S$788 million (based on trailing twelve months to June 2023).
“Return” refers to a company’s earnings over the past year. That means for every S$1 of shareholders’ equity, the company generated S$0.01 of his profit.
What is the relationship between ROE and profit growth rate?
So far, we have learned that ROE measures how efficiently a company is generating its profits. We are then able to evaluate a company’s future ability to generate profits based on how much of its profits it chooses to reinvest or “retain”. Assuming everything else remains constant, the higher the ROE and profit retention, the higher the company’s growth rate compared to companies that don’t necessarily have these characteristics.
Gallant Venture’s earnings growth and ROE 0.5%
It’s hard to argue that Gallant Venture’s ROE is very good on its own. Not only that, but compared to the industry average of 10%, the company’s ROE is completely unremarkable. However, we’re pleasantly surprised to see that Gallant Venture has grown its net income by a strong 26% over the past five years. We believe there may be other aspects that are positively impacting the company’s earnings growth. Maintaining high profits and efficient management, etc.
As a next step, we compared Gallant Venture’s net income growth to its industry and found that the company has a similar growth rate when compared to the industry average growth rate of 24% over the same period.
Earnings growth is an important metric to consider when evaluating a stock. Investors should check whether expected earnings growth or decline has been factored in in any case. By doing so, you can find out if the stock is headed for clear blue waters or if a swamp awaits. Is Gallant Venture fairly valued compared to other companies? These 3 valuation metrics can help you decide.
Is Gallant Venture effectively utilizing its retained earnings?
Given that Gallant Venture doesn’t pay dividends to shareholders, we can assume that the company reinvests all of its profits into growing its business.
summary
Overall, we feel that Gallant Venture certainly has some positive factors to consider. Despite the low ROE, the company was able to achieve strong earnings growth due to its high reinvestment rate.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our 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 using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
[ad_2]
Source link
