Yahoo Finance B.V. Delftsch Aardewerkfabriek "De Porceleyne Fles Anno 1653"'s (AMS:PORF) Stock On An Uptrend: Could Fundamentals Be Driving The Momentum?
B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's (AMS:PORF) stock is up by a considerable 23% over the past week. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to study its financial indicators more closely to see if they had a hand to play in the recent price move. Particularly, we will be paying attention to B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's ROE today.
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
View our latest analysis for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653
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 B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 is:
2.4% = €426k ÷ €18m (Based on the trailing twelve months to June 2023).
The 'return' refers to a company's earnings over the last year. So, this means that for every €1 of its shareholder's investments, the company generates a profit of €0.02.
What Is The Relationship Between ROE And Earnings Growth?
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.
B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's Earnings Growth And 2.4% ROE
It is hard to argue that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's ROE is much good in and of itself. Not just that, even compared to the industry average of 10%, the company's ROE is entirely unremarkable. In spite of this, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 was able to grow its net income considerably, at a rate of 21% in the last five years. Therefore, there could be other reasons behind this growth. 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.
We then compared B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653'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 5.1% in the same 5-year period.
Earnings growth is an important metric to consider when valuing a stock. 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 B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 fairly valued compared to other companies? These 3 valuation measures might help you decide.
Is B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 Making Efficient Use Of Its Profits?
While the company did pay out a portion of its dividend in the past, it currently doesn't pay a dividend. This is likely what's driving the high earnings growth number discussed above.
Summary
In total, it does look like B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has some positive aspects to its business. Despite its low rate of return, the fact that the company reinvests a very high portion of its profits into its business, no doubt contributed to its high earnings growth. So far, we've only made a quick discussion around the company's earnings growth. So it may be worth checking this free detailed graph of B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's past earnings, as well as revenue and cash flows to get a deeper insight into the company's performance.
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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.
