[ad_1]
AME Elite Consortium Berhad (KLSE:AME) has been doing well on the stock market, with its share price increasing by a significant 12% over the past three months. Given that the market rewards strong financials in the long run, I wonder if that will be the case this time as well. Specifically, we decided to examine AME Elite Consortium Berhad’s ROE in this article.
Return on equity or ROE tests how effectively a company is growing its value and managing investors’ money. In other words, ROE shows the profit generated per dollar of a shareholder’s investment.
Check out our latest analysis for AME Elite Consortium Berhad.
How is ROE calculated?
of ROE calculation formula teeth:
Return on equity = Net income (from continuing operations) ÷ Shareholders’ equity
So, based on the above formula, AME Elite Consortium Berhad’s ROE is:
12% = RM136m ÷ RM1.2b (Based on trailing 12 months to September 2023).
“Earnings” is the amount of your after-tax earnings over the past 12 months. This means that for every RM1 of a shareholder’s investment, the company will generate a profit of RM0.12 for him.
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 all else is equal, companies with both higher return on equity and higher profit retention typically have higher growth rates when compared to companies that don’t have the same characteristics.
Side-by-side comparison of AME Elite Consortium Berhad’s earnings growth and 12% ROE
At first glance, AME Elite Consortium Berhad appears to have a decent ROE. His ROE for the company looks pretty good, especially when compared to the industry average of 6.8%. Perhaps as a result of this, AME Elite Consortium Berhad has been able to grow at a respectable 15% over the past five years.
We then compared AME Elite Consortium Berhad’s net income growth rate to its industry. The same he found that the company’s growth rate was high when compared to the industry where in five years he recorded a growth rate of 2.5%.
Earnings growth is an important metric to consider when evaluating a stock. The next thing investors need to determine is whether the expected earnings growth is already built into the stock price, or the lack thereof. That way, you’ll know if the stock is headed for clear blue waters or if a swamp awaits. Is AME Elite Consortium Berhad fairly valued compared to other companies? These 3 rating scales can help you decide.
Is AME Elite Consortium Berhad effectively utilizing its retained earnings?
With a three-year median payout ratio of 31% (meaning the company retains 69% of its profits), AME Elite Consortium Berhad has seen considerable growth in its earnings and It seems that they are efficiently reinvesting in the form of paying . It’s well covered.
Additionally, AME Elite Consortium Berhad has been paying dividends for three years. This means that the company is quite serious about sharing profits with shareholders. We checked the latest analyst consensus data and found that the company is expected to continue paying out around 30% of its profit over the next three years. In any case, AME Elite Consortium Berhad’s ROE is estimated to fall to 8.8%, although no change is expected to the dividend payout ratio.
conclusion
Overall, I am very satisfied with the performance of AME Elite Consortium Berhad. Specifically, we like that the company reinvests a huge amount of its profits at a high rate of return. Of course, this significantly increased the company’s revenue. Having said that, a review of the latest analyst forecasts indicates that the company’s future revenue growth is expected to slow. To know more about the latest analyst forecasts for the company, check out this visualization of analyst forecasts for the company.
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
