Most readers will already be aware that Royal Unibrew (CPH:RBREW) stock has surged 17% over the past three months. Markets typically pay for a company’s long-term fundamentals, so we decided to look at a company’s key performance indicators to see if they could impact the market. . In this article, we decided to focus on: ROE of Royal Unibrew.
Return on equity or ROE is an important metric used to assess how efficiently a company’s management is using the company’s capital. In other words, it shows that we have succeeded in turning shareholder investment into profit.
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How to calculate return on equity
of ROE formula teeth:
Return on Equity = Net Income (from Continuing Operations) ÷ Shareholders’ Equity
Therefore, based on the above formula, Royal Unibrew’s ROE would be:
31% = kr.1.5b ÷ kr.4.9b (based on the last 12 months to September 2022).
“Return” is your profit over the last 12 months. This therefore means that for every DKK1 of a shareholder’s investment, the company will generate a profit of DKK0.31 of his.
Why ROE Is Important to Profit Growth
So far, we’ve learned that ROE measures how efficiently a company generates profits. Depending on how much of these earnings a company reinvests or “holds” and how effective it is, a company’s potential for revenue growth can be assessed. All else being equal, companies with both high return on equity and high profit margins typically have higher growth rates compared to companies without the same capabilities.
Royal Unibrew revenue growth and 31% ROE
First of all, it is interesting that Royal Unibrew has a fairly high ROE. Second, the industry-reported 12% average ROE comparison is not overlooked by us either. Perhaps as a result of this, Royal Unibrew has been able to see a decent net profit growth of 11% over the past five years.
We then compared Royal Unibrew’s net profit growth to the industry and found that the company grew faster than the industry, which grew 9.2% over the same period.
Earnings growth is an important metric to consider when evaluating stocks. It is important for investors to know whether the market is pricing in a company’s expected earnings growth (or decline). That way, you’ll know if your stock is headed for clear blue waters, or if wet waters await.What is his RBREW worth today? Our free research report intrinsic value infographic helps you visualize if RBREW is currently mispriced in the market.
Is Royal Unibrew making good use of its retained earnings?
Royal Unibrew’s high three-year median payout ratio of 53% (or 47% retention) actually hinders the company’s growth despite returning most of its income to shareholders. This suggests that the
Additionally, Royal Unibrew has paid dividends for at least 10 years. This means the company is serious about sharing profits with its shareholders. Based on the latest analyst estimates, the company’s future payout percentage over the next three years is expected to stabilize at 57%. So the projection is that Royal Unibrew’s future ROE is 34%, which is also similar to his current ROE.
Overall, I feel that Royal Unibrew has performed very well. In particular, his high ROE has contributed to the remarkable growth in terms of earnings. Even though the company reinvests only a small portion of its profits, it has been successful in increasing its earnings, and it is substantial.That said, a survey of current analyst estimates found that while the company had grown earnings in the past, analysts were concerned that future earnings would shrink. If you would like to learn more about future revenue growth projections, please click here freedom For more information, see the company’s analyst forecasts report.
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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …