![]() ![]() This article by Simply Wall St is general in nature. Alternatively, email editorial-team (at). Have feedback on this article? Concerned about the content? Get in touch with us directly. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. Having said that, the company's earnings growth is expected to slow down, as forecasted in the current analyst estimates. With a high rate of reinvestment, albeit at a low ROE, the company has managed to see a considerable growth in its earnings. In total, it does look like Etihad Etisalat has some positive aspects to its business. ![]() Despite the higher expected payout ratio, the company's ROE is not expected to change by much. Our latest analyst data shows that the future payout ratio of the company is expected to rise to 74% over the next three years. Moreover, Etihad Etisalat is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. So it seems that Etihad Etisalat is reinvesting efficiently in a way that it sees impressive growth in its earnings (discussed above) and pays a dividend that's well covered. Is Etihad Etisalat Making Efficient Use Of Its Profits?Įtihad Etisalat's three-year median payout ratio is a pretty moderate 49%, meaning the company retains 51% of its income. Is 7020 fairly valued? This infographic on the company's intrinsic value has everything you need to know. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. ![]() ![]() The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. SASE:7020 Past Earnings Growth September 13th 2022 We then compared Etihad Etisalat'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 5.5% in the same period. Such as - high earnings retention or an efficient management in place. Therefore, there could be other reasons behind this growth. In spite of this, Etihad Etisalat was able to grow its net income considerably, at a rate of 74% in the last five years. Even compared to the average industry ROE of 11%, the company's ROE is quite dismal. Etihad Etisalat's Earnings Growth And 8.4% ROEĪs you can see, Etihad Etisalat's ROE looks pretty weak. 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. 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. We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Why Is ROE Important For Earnings Growth? One way to conceptualize this is that for each SAR1 of shareholders' capital it has, the company made SAR0.08 in profit. The 'return' is the amount earned after tax over the last twelve months. So, based on the above formula, the ROE for Etihad Etisalat is:Ĩ.4% = ر.س1.3b ÷ ر.س15b (Based on the trailing twelve months to June 2022). Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity See our latest analysis for Etihad Etisalat How Do You Calculate Return On Equity? In short, ROE shows the profit each dollar generates with respect to its shareholder investments. Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Particularly, we will be paying attention to Etihad Etisalat's ROE today. We wonder if and what role the company's financials play in that price change as a company's long-term fundamentals usually dictate market outcomes. Etihad Etisalat's (TADAWUL:7020) stock up by 8.1% over the past three months. ![]()
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