AP Memory Technology (TWSE:6531) has seen an 8.8% decline in its stock over the past three months. However, a closer look at its financial health suggests that there could be potential for long-term growth. One indicator of this is the company’s Return on Equity (ROE) which stands at 13%, indicating that for every NT$1 of shareholder equity, the company generates NT$0.13 in profit.
ROE is a measure of profitability and can indicate a company’s future ability to generate profits based on how much it reinvests. AP Memory Technology’s ROE of 13% is similar to the industry average of 11%, and has contributed to a significant 27% net income growth over the past five years. This growth rate is higher than the industry average of 9.9%, indicating strong performance.
Furthermore, the company has a three-year median payout ratio of 65%, meaning it retains only 35% of its income while paying dividends to shareholders. Analyst estimates suggest that the payout ratio is expected to drop to 12% over the next three years, leading to an anticipated rise in the company’s future ROE to 20%.
Overall, AP Memory Technology’s performance, particularly its high ROE and earnings growth, is promising. While the company reinvests only a small portion of its profits, it has still managed to achieve impressive growth. Analyst forecasts indicate that the company’s earnings growth is expected to continue at a similar rate. Investors interested in learning more can review the company’s free report on analyst forecasts for additional insights.
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