Wagners Holding Company Limited's (ASX:WGN) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?

Simply Wall St.08-17

Most readers would already be aware that Wagners Holding's (ASX:WGN) stock increased significantly by 15% over the past month. However, we wonder if the company's inconsistent financials would have ...

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However, we wonder if the company's inconsistent financials would have ...</p>\n\n<a href=\"https://finance.yahoo.com/news/wagners-holding-company-limiteds-asx-000535165.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":"BK7044","symbol_name":"建筑材料","start_time":0,"source_url":"https://finance.yahoo.com/news/wagners-holding-company-limiteds-asx-000535165.html","article_id":"2460279854","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/Ox9tvV8.zS7T2eE7P66USA--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/0879100571fc0755502bcfa39cd0a464"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2460279854","pubTimestamp":1723853135,"sourceInfo":{"source_id":"yahoofinance_au","name":"Yahoo Finance AU"},"weMediaInfo":null,"summary":"Most readers would already be aware that Wagners Holding's  stock increased significantly by 15% over the past month. However, we wonder if the company's inconsistent financials would have any adverse impact on the current share price momentum. In this article, we decided to focus on Wagners Holding's  ROE.Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.Return on Equity = Net Profit  ÷ Shareholders' Equity. So, based on the above formula, the ROE for Wagners Holding is:. So far, we've learned that ROE is a measure of a company's profitability. 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 everything else remains unchanged, the higher the ROE and profit retention","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7044":"建筑材料","WGN.AU":"WAGNERS HOLDING CO LTD"},"translate_title":"瓦格纳控股有限公司（ASX：WGN）的股价正在飙升，但财务状况似乎不一致：上升趋势会持续吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"WGN.AU":1},"content_text":"Most readers would already be aware that Wagners Holding's (ASX:WGN) stock increased significantly by 15% over the past month. However, we wonder if the company's inconsistent financials would have any adverse impact on the current share price momentum. In this article, we decided to focus on Wagners Holding's  ROE. \n Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. \n View our latest analysis for Wagners Holding \n How Do You Calculate Return On Equity? \n ROE can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Wagners Holding is:\n5.3% = AU$6.7m ÷ AU$127m (Based on the trailing twelve months to December 2023).\n The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each A$1 of shareholders' capital it has, the company made A$0.05 in profit. \n What Has ROE Got To Do With Earnings Growth? \n So far, we've learned that ROE is a measure of a company's profitability. 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 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 Wagners Holding's Earnings Growth And 5.3% ROE \n When you first look at it, Wagners Holding's ROE doesn't look that attractive. Next, when compared to the average industry ROE of 8.4%, the company's ROE leaves us feeling even less enthusiastic. For this reason, Wagners Holding's five year net income decline of 16% is not surprising given its lower ROE. However, there could also be other factors causing the earnings to decline. Such as - low earnings retention or poor allocation of capital. \n However, when we compared Wagners Holding's growth with the industry we found that while the company's earnings have been shrinking, the industry has seen an earnings growth of 11% in the same period. This is quite worrisome. \n\n\n\n  ASX:WGN Past Earnings Growth August 17th 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). Doing so will help them establish if the stock's future looks promising or ominous. Has the market priced in the future outlook for WGN? You can find out in our latest intrinsic value infographic research report.  \n Is Wagners Holding Using Its Retained Earnings Effectively? \n Wagners Holding doesn't pay any regular dividends, meaning that the company is keeping all of its profits, which makes us wonder why it is retaining its earnings if it can't use them to grow its business. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds. \n Summary \n On the whole, we feel that the performance shown by Wagners Holding can be open to many interpretations. While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth. 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. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. \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. 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