Safety Insurance Group, Inc.'s (NASDAQ:SAFT) Stock Going Strong But Fundamentals Look Weak: What Implications Could This Have On The Stock?

Simply Wall St.09-04

Most readers would already be aware that Safety Insurance Group's (NASDAQ:SAFT) stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key ...

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We, however wanted to have a closer look at its key ...</p>\n\n<a href=\"https://finance.yahoo.com/news/safety-insurance-group-inc-nasdaq-140443610.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/safety-insurance-group-inc-nasdaq-140443610.html","article_id":"2464048693","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/ca0QjzCOIJS6mEEo5FHYOg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/3e52ee1226beceda60ea12e1753723f0"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2464048693","pubTimestamp":1725458683,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Most readers would already be aware that Safety Insurance Group's  stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key financial indicators as the markets usually pay for long-term fundamentals, and in this case, they don't look very promising. In this article, we decided to focus on Safety Insurance Group's  ROE.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. Put another way, it reveals the company's success at turning shareholder investments into profits.See our latest analysis for Safety Insurance Group. Return on Equity = Net Profit  ÷ Shareholders' Equity. 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 . This then helps them determine if the stock is placed fo","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".IXIC":"NASDAQ Composite","QLD":"纳指两倍做多ETF","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","PSQ":"纳指反向ETF","BK4588":"碎股","BK4107":"财产与意外伤害保险","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","SQQQ":"纳指三倍做空ETF","TQQQ":"纳指三倍做多ETF","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","QID":"纳指两倍做空ETF","SAFT":"Safety Insurance Group","NDAQ":"纳斯达克OMX交易所","BK4112":"金融交易所和数据","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","BK4585":"ETF&股票定投概念"},"translate_title":"安全保险集团公司（纳斯达克：SAFT）的股票走强，但基本面看起来疲软：这可能对该股产生什么影响？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SAFT":1,"NDAQ":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":"Most readers would already be aware that Safety Insurance Group's (NASDAQ:SAFT) stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key financial indicators as the markets usually pay for long-term fundamentals, and in this case, they don't look very promising. In this article, we decided to focus on Safety Insurance Group's  ROE. \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. Put another way, it reveals the company's success at turning shareholder investments into profits. \n See our latest analysis for Safety Insurance Group \n How Do You Calculate Return On Equity? \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 Safety Insurance Group is:\n6.3% = US$51m ÷ US$810m (Based on the trailing twelve months to June 2024).\n The 'return' is the yearly profit. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.06 in profit. \n Why Is ROE Important For Earnings Growth? \n We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. 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 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. \n A Side By Side comparison of Safety Insurance Group's Earnings Growth And 6.3% ROE \n When you first look at it, Safety Insurance Group's ROE doesn't look that attractive. Next, when compared to the average industry ROE of 13%, the company's ROE leaves us feeling even less enthusiastic. Given the circumstances, the significant decline in net income by 21% seen by Safety Insurance Group over the last five years is not surprising. We believe that there also might be other aspects that are negatively influencing the company's earnings prospects. For instance, the company has a very high payout ratio, or is faced with competitive pressures. \n So, as a next step, we compared Safety Insurance Group's 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 10% over the last few years. \n\n\n\n  NasdaqGS:SAFT Past Earnings Growth September 4th 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). This then helps them determine if the stock is placed for a bright or bleak future. Is Safety Insurance Group fairly valued compared to other companies? These 3 valuation measures might help you decide. \n Is Safety Insurance Group Using Its Retained Earnings Effectively? \n With a three-year median payout ratio as high as 103%,Safety Insurance Group's shrinking earnings don't come as a surprise as the company is paying a dividend which is beyond its means. Paying a dividend beyond their means is usually not viable over the long term. To know the 2 risks we have identified for Safety Insurance Group visit our risks dashboard for free. \n Moreover, Safety Insurance Group has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. \n Conclusion \n On the whole, Safety Insurance Group's performance is quite a big let-down. Specifically, it has shown quite an unsatisfactory performance as far as earnings growth is concerned, and a poor ROE and an equally poor rate of reinvestment seem to be the reason behind this inadequate performance. Until now, we have only just grazed the surface of the company's past performance by looking at the company's fundamentals. You can do your own research on Safety Insurance Group and see how it has performed in the past by looking at this FREE detailed graph of past earnings, revenue and cash flows. \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.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2464048693"}