Should We Be Delighted With Collegium Pharmaceutical, Inc.'s (NASDAQ:COLL) ROE Of 46%?

Simply Wall St.09-26

Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). By way of ...

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This article is for those who would like to learn about Return On Equity (ROE). By way of ...</p>\n\n<a href=\"https://finance.yahoo.com/news/delighted-collegium-pharmaceutical-inc-nasdaq-105231796.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":"COLL","symbol_name":"Collegium Pharmaceutical, Inc.","start_time":0,"source_url":"https://finance.yahoo.com/news/delighted-collegium-pharmaceutical-inc-nasdaq-105231796.html","article_id":"2470782594","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/TLyt5D16lsSwRjJRVjlUTA--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/fd5474a7eee0c5f442903b68fe63249b"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2470782594","pubTimestamp":1727347951,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity . By way of learning-by-doing, we'll look at ROE to gain a better understanding of Collegium Pharmaceutical, Inc. .Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company's success at turning shareholder investments into profits.So, based on the above formula, the ROE for Collegium Pharmaceutical is:. Does Collegium Pharmaceutical Have A Good Return On Equity?Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. As is clear from the image below, Collegium Pharmaceutical has a better ROE than the average (22%) in the Pharmaceuticals industry.Com","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"COLL":"Collegium Pharmaceutical, Inc.","NDAQ":"纳斯达克OMX交易所","QLD":"纳指两倍做多ETF","BK4007":"制药","TQQQ":"纳指三倍做多ETF","PSQ":"纳指反向ETF","SQQQ":"纳指三倍做空ETF","BK4588":"碎股","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD",".IXIC":"NASDAQ Composite","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","BK4112":"金融交易所和数据","IE00B64PRP62.GBP":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC","QID":"纳指两倍做空ETF","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","ROE":"ASTORIA US QUALITY KINGS ETF","IE00BGHQF748.EUR":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (EUR) ACC","BK4585":"ETF&股票定投概念"},"translate_title":"我们应该对Collegium Pharmaceutical，Inc.（纳斯达克股票代码：COLL）46%的ROE感到高兴吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ROE":1,"COLL":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":"Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). By way of learning-by-doing, we'll look at ROE to gain a better understanding of Collegium Pharmaceutical, Inc. (NASDAQ:COLL). \n Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company's success at turning shareholder investments into profits. \n See our latest analysis for Collegium Pharmaceutical \n How To 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 Collegium Pharmaceutical is:\n46% = US$100m ÷ US$217m (Based on the trailing twelve months to June 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 $0.46 in profit. \n Does Collegium Pharmaceutical Have A Good Return On Equity? \n Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. Importantly, this is far from a perfect measure, because companies differ significantly within the same industry classification. As is clear from the image below, Collegium Pharmaceutical has a better ROE than the average (22%) in the Pharmaceuticals industry. \n\n\n\n  NasdaqGS:COLL Return on Equity September 26th 2024\n \n\n That's clearly a positive. Bear in mind, a high ROE doesn't always mean superior financial performance. Aside from changes in net income, a high ROE can also be the outcome of high debt relative to equity, which indicates risk. To know the 2 risks we have identified for Collegium Pharmaceutical visit our risks dashboard for free. \n How Does Debt Impact ROE? \n Most companies need money -- from somewhere -- to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same. \n Combining Collegium Pharmaceutical's Debt And Its 46% Return On Equity \n Collegium Pharmaceutical does use a high amount of debt to increase returns. It has a debt to equity ratio of 2.55. While no doubt that its ROE is impressive, we would have been even more impressed had the company achieved this with lower debt. Investors should think carefully about how a company might perform if it was unable to borrow so easily, because credit markets do change over time. \n Summary \n Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have the same ROE, then I would generally prefer the one with less debt. \n But when a business is high quality, the market often bids it up to a price that reflects this. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. So I think it may be worth checking this free report on analyst forecasts for the company. \n Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this  free list of interesting companies. \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":"Business Data","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/2470782594"}