Hollysys Automation Technologies Ltd. (NASDAQ:HOLI) Is Going Strong But Fundamentals Appear To Be Mixed : Is There A Clear Direction For The Stock?

Simply Wall St.07-19

Hollysys Automation Technologies (NASDAQ:HOLI) has had a great run on the share market with its stock up by a significant 20% over the last month. But the company's key financial indicators appear to ...

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(NASDAQ:HOLI) Is Going Strong But Fundamentals Appear To Be Mixed : Is There A Clear Direction For The Stock?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-19 02:53 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/hollysys-automation-technologies-ltd-nasdaq-185351959.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Hollysys Automation Technologies (NASDAQ:HOLI) has had a great run on the share market with its stock up by a significant 20% over the last month. But the company's key financial indicators appear to ...</p>\n\n<a href=\"https://finance.yahoo.com/news/hollysys-automation-technologies-ltd-nasdaq-185351959.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".IXIC","symbol_name":"NASDAQ Composite","start_time":0,"source_url":"https://finance.yahoo.com/news/hollysys-automation-technologies-ltd-nasdaq-185351959.html","article_id":"2452455525","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/CgF_bHzIPDCsG3KwCCLvew--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/2bc7e9c938f83604e86f7ffd61b40d2a"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2452455525","pubTimestamp":1721328831,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Hollysys Automation Technologies  has had a great run on the share market with its stock up by a significant 20% over the last month. But the company's key financial indicators appear to be differing across the board and that makes us question whether or not the company's current share price momentum can be maintained. Particularly, we will be paying attention to Hollysys Automation Technologies'  ROE today.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. Simply put, it is used to assess the profitability of a company in relation to its equity capital.View our latest analysis for Hollysys Automation Technologies. Return on Equity = Net Profit  ÷ Shareholders' Equity. So, based on the above formula, the ROE for Hollysys Automation Technologies is:. Hollysys Automation Technologies' Earnings Growth And 6.1% ROE. The basis for attaching value to a company is, to a great extent, tied to it","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".IXIC":"NASDAQ Composite","BK4588":"碎股","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","LU0315179316.USD":"EASTSPRING INVESTMENTS ASIAN DYNAMIC \"A\" (USD) ACC","BK4580":"工业 4.0","QID":"纳指两倍做空ETF","BK4112":"金融交易所和数据","HOLI":"和利时自动化","SQQQ":"纳指三倍做空ETF","NDAQ":"纳斯达克OMX交易所","BK4585":"ETF&股票定投概念","QLD":"纳指两倍做多ETF","BK4157":"电子设备和仪器","TQQQ":"纳指三倍做多ETF","PSQ":"纳指反向ETF"},"translate_title":"和利时自动化技术有限公司（纳斯达克：HOLI）走势强劲，但基本面似乎好坏参半：该股有明确的方向吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NDAQ":1,"HOLI":1,".IXIC":1,"TQQQ":0.6,"SQQQ":0.6,"QLD":0.6,"QID":0.6,"PSQ":0.6,"NQmain":0.6,"MNQmain":0.6},"content_text":"Hollysys Automation Technologies (NASDAQ:HOLI) has had a great run on the share market with its stock up by a significant 20% over the last month. But the company's key financial indicators appear to be differing across the board and that makes us question whether or not the company's current share price momentum can be maintained. Particularly, we will be paying attention to Hollysys Automation Technologies'  ROE today. \n 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. Simply put, it is used to assess the profitability of a company in relation to its equity capital. \n View our latest analysis for Hollysys Automation Technologies \n How Is ROE Calculated? \n The formula for return on equity is: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Hollysys Automation Technologies is:\n6.1% = US$75m ÷ US$1.2b (Based on the trailing twelve months to March 2024).\n The 'return' is the amount earned after tax over the last twelve months. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.06 in profit. \n Why Is ROE Important For Earnings Growth? \n Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. \n Hollysys Automation Technologies' Earnings Growth And 6.1% ROE \n When you first look at it, Hollysys Automation Technologies' ROE doesn't look that attractive. We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 9.6%. Given the circumstances, the significant decline in net income by 4.1% seen by Hollysys Automation Technologies over the last five years is not surprising. We reckon that there could also be other factors at play here. For example, it is possible that the business has allocated capital poorly or that the company has a very high payout ratio. \n So, as a next step, we compared Hollysys Automation Technologies' performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 15% over the last few years. \n\n\n\n  NasdaqGS:HOLI Past Earnings Growth July 18th 2024\n \n\n The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Hollysys Automation Technologies fairly valued compared to other companies? These 3 valuation measures might help you decide. \n Is Hollysys Automation Technologies Using Its Retained Earnings Effectively? \n While the company did payout a portion of its dividend in the past, it currently doesn't pay a regular dividend. This implies that potentially all of its profits are being reinvested in the business. \n Summary \n In total, we're a bit ambivalent about Hollysys Automation Technologies' performance. 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. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. You can see the 2 risks we have identified for Hollysys Automation Technologies by visiting our risks dashboard for free  on our platform here. \nHave 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.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. 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