Angelalign Technology (HKG:6699) has been doing well on the stock market, with its shares up a hefty 18% in the last month. As most people know, fundamentals typically guide market price movements over the long term, so today we'll take a look at the company's key financial metrics to see if they play any role in the recent price movement. I decided to judge. In particular, I would like to pay attention to Angelalign Technology's ROE today.
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 on Angelalign technology.
How do you calculate return on equity?
ROE can be calculated using the following formula:
Return on equity = Net income (from continuing operations) ÷ Shareholders' equity
So, based on the above formula, Angelalign Technology's ROE is:
4.9% = CA$169 million ÷ CA$3.4 billion (based on trailing twelve months to June 2023).
“Return” refers to a company's earnings over the past year. This means that for every HK$1 of a shareholder's investment, the company will generate a profit of HK$0.05 for him.
Why is ROE important for profit growth?
So far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits a company reinvests or “retains”, and how effectively it does so, we are then able to assess a company's earnings growth potential. 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.
A side-by-side comparison of Angelalign Technology's earnings growth and ROE of 4.9%.
At first glance, Angelalign Technology's ROE isn't all that exciting. We then compared our company's ROE with the broader industry and were disappointed to find that its ROE is lower than the industry average of 9.9%. Yet, surprisingly, Angelalign Technology has recorded an exceptional 20% net income growth over the past five years. Therefore, there may be other aspects that are positively impacting the company's revenue growth. For example: – Maintaining high profits and efficient management.
As a next step, we compared Angelalign Technology's net income growth to its industry. And we're happy to see that the company's growth is faster than the industry's average growth rate of 13%.
Earnings growth is an important metric to consider when evaluating a stock. It's important for investors to know whether the market is pricing in a company's expected earnings growth (or decline). Doing so will help you determine whether a stock's future is promising or ominous. Is the market factoring in 6699's future prospects? Find out in our latest Intrinsic Value infographic research report.
Does Angelalign Technology reinvest profits efficiently?
conclusion
Overall, we feel that Angelalign technology has some positive attributes. Despite the low ROE, the company was able to achieve strong earnings growth due to its high reinvestment rate. That said, the company's earnings are expected to accelerate, according to the latest industry analyst forecasts. To know more about the latest analyst forecasts for the company, check out this visualization of analyst forecasts for the company.
Valuation is complex, but we help make it simple.
Check out our comprehensive analysis to see if Angelalign Technology is potentially overvalued or undervalued. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.
See free analysis
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 using only unbiased methodologies, based on historical data and analyst forecasts, 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.
