Are CRRC Corporation Limited's (SHSE:601766) Mixed Financials Driving The Negative Sentiment?
Are CRRC Corporation Limited's (SHSE:601766) Mixed Financials Driving The Negative Sentiment?
CRRC (SHSE:601766) has had a rough month with its share price down 4.4%. It is possible that the markets have ignored the company's differing financials and decided to lean-in to the negative sentiment. Stock prices are usually driven by a company's financial performance over the long term, and therefore we decided to pay more attention to the company's financial performance. In this article, we decided to focus on CRRC's ROE.
ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.
View our latest analysis for CRRC
How Is ROE Calculated?
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for CRRC is:
6.2% = CN¥11b ÷ CN¥183b (Based on the trailing twelve months to March 2022).
The 'return' is the profit over the last twelve months. Another way to think of that is that for every CN¥1 worth of equity, the company was able to earn CN¥0.06 in profit.
What Is The Relationship Between ROE And Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.
A Side By Side comparison of CRRC's Earnings Growth And 6.2% ROE
At first glance, CRRC's ROE doesn't look very promising. A quick further study shows that the company's ROE doesn't compare favorably to the industry average of 8.2% either. Therefore, CRRC's flat earnings over the past five years can possibly be explained by the low ROE amongst other factors.
Next, on comparing with the industry net income growth, we found that the industry grew its earnings by14% in the same period.
SHSE:601766 Past Earnings Growth August 8th 2022Earnings growth is a huge factor in stock valuation. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. This then helps them determine if the stock is placed for a bright or bleak future. What is 601766 worth today? The intrinsic value infographic in our free research report helps visualize whether 601766 is currently mispriced by the market.
Is CRRC Efficiently Re-investing Its Profits?
Despite having a normal three-year median payout ratio of 42% (implying that the company keeps 58% of its income) over the last three years, CRRC has seen a negligible amount of growth in earnings as we saw above. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds.
Additionally, CRRC has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Based on the latest analysts' estimates, we found that the company's future payout ratio over the next three years is expected to hold steady at 49%. As a result, CRRC's ROE is not expected to change by much either, which we inferred from the analyst estimate of 7.4% for future ROE.
Summary
On the whole, we feel that the performance shown by CRRC can be open to many interpretations. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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 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.
中國中車(上交所:601766)經歷了艱難的一個月,其股價下跌了4.4%。市場可能忽視了該公司不同的財務狀況,決定向負面情緒傾斜。股票價格通常是由公司的長期財務表現推動的,因此我們決定更多地關注公司的財務表現。在本文中,我們決定將重點放在中國中車的淨資產收益率上。
淨資產收益率,即股本回報率,是評估一家公司從股東那裏獲得投資回報的有效程度的有用工具。簡而言之,淨資產收益率顯示了每一美元相對於其股東投資產生的利潤。
查看我們對中國中車的最新分析
淨資產收益率是如何計算的?
這個淨資產收益率公式是:
股本回報率=(持續經營的)淨利潤?股東權益
因此,根據上述公式,中國中車的淨資產收益率為:
6.2%=110億元×1830億元(以截至2022年3月的12個月為基礎)。
“收益”是過去12個月的利潤。另一種説法是,公司每持有價值1元的股權,就能賺取0.06元的利潤。
淨資產收益率與盈利增長之間有什麼關係?
到目前為止,我們已經瞭解到淨資產收益率衡量的是一家公司創造利潤的效率。我們現在需要評估公司將多少利潤再投資或“保留”用於未來的增長,這就讓我們對公司的增長潛力有了一個瞭解。假設其他條件相同,與沒有相同特徵的公司相比,擁有更高股本回報率和更高利潤保留率的公司通常會有更高的增長率。
中國中車盈利增長與6.2%淨資產收益率的對比分析
乍一看,中國中車的淨資產收益率看起來並不是很有希望。一項快速的進一步研究顯示,該公司的淨資產收益率(ROE)也不及8.2%的行業平均水平。因此,中國中車過去五年的收益持平可能是由於淨資產收益率較低等因素造成的。
其次,通過與行業淨收入增長的比較,我們發現同期行業淨收入增長了14%。
上證所:過去601766的收益增長2022年8月8日盈利增長是股票估值的一個重要因素。投資者下一步需要確定的是,預期的收益增長是否已經計入了股價。這有助於他們確定這隻股票是為光明還是黯淡的未來做準備。今天601766的價值是多少?我們免費研究報告中的內在價值信息圖有助於直觀地瞭解601766目前是否被市場錯誤定價。
中國中車是否有效地將其利潤進行了再投資?
儘管中國中車在過去三年的正常三年派息率中值為42%(這意味着公司保留了58%的收入),但正如我們上面看到的那樣,中國中車的收益增長微不足道。因此,可能還有其他因素在起作用,可能會阻礙經濟增長。例如,該業務一直面臨一些不利因素。
此外,中國中車至少在十年內分紅,這意味着公司管理層決心分紅,即使這意味着收益幾乎沒有增長。根據最新的分析師預估,我們發現該公司未來三年的派息比率預計將穩定在49%。因此,中國中車的淨資產收益率預計也不會有太大變化,這是我們從分析師對未來淨資產收益率的7.4%的估計中推斷出來的。
摘要
總體而言,我們覺得中國中車展示的表現可以有多種解讀。儘管它似乎保留了大部分利潤,但鑑於淨資產收益率較低,投資者可能終究不會從所有這些再投資中受益。低收益增長率表明我們的理論是正確的。既然如此,最新的行業分析師預測顯示,分析師們預計該公司的收益增長率將大幅提高。這些分析師的預期是基於對該行業的廣泛預期,還是基於該公司的基本面?點擊此處進入我們分析師對該公司的預測頁面。
對這篇文章有什麼反饋嗎?擔心內容嗎? 保持聯繫直接與我們聯繫。或者,也可以給編輯組發電子郵件,地址是implywallst.com。
本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。
譯文內容由第三人軟體翻譯。
風險及免責聲明
- 分享到weixin
- 分享到qq
- 分享到facebook
- 分享到twitter
- 分享到微博
- 粘贴板
使用瀏覽器的分享功能,分享給你的好友吧