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So it may be worth checking this free detailed graph of Medinex's past earnings, as well as revenue and cash flows to get a deeper insight into the company's performance. Up till now, we've only made a short study of the company's growth data. However, the low profit retention means that the company's earnings growth could have been higher, had it been reinvesting a higher portion of its profits.
That is, quite an impressive growth in earnings. On the whole, we do feel that Medinex has some positive attributes. This implies that the company has been able to achieve high earnings growth despite returning most of its profits to shareholders.Īdditionally, Medinex has paid dividends over a period of four years which means that the company is pretty serious about sharing its profits with shareholders. Medinex has a significant three-year median payout ratio of 63%, meaning the company only retains 37% of its income. Is Medinex Efficiently Re-investing Its Profits? 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 reckon that there could be other factors at play here. Despite this, surprisingly, Medinex saw an exceptional 22% net income growth over the past five years.
Next, when compared to the average industry ROE of 11%, the company's ROE leaves us feeling even less enthusiastic. A Side By Side comparison of Medinex's Earnings Growth And 8.6% ROEĪt first glance, Medinex's ROE doesn't look very promising. 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. So far, we've learned that ROE is a measure of a company's profitability. Why Is ROE Important For Earnings Growth? So, this means that for every SGD1 of its shareholder's investments, the company generates a profit of SGD0.09. The 'return' is the income the business earned over the last year. So, based on the above formula, the ROE for Medinex is:Ĩ.6% = S$1.5m ÷ S$18m (Based on the trailing twelve months to September 2022). Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity ROE can be calculated by using the formula: Simply put, it is used to assess the profitability of a company in relation to its equity capital.Ĭheck out our latest analysis for Medinex How Is ROE Calculated? Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Specifically, we decided to study Medinex's ROE in this article. However, the company's key financials probably have more to say so you may want to give the company a closer look given that stock prices usually follow the long-term financial performance of a business. It is easy to overlook Medinex's (Catalist:OTX) given its unimpressive and roughly flat price performance over the past week.
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