Evolution Mining Limited's (ASX:EVN) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?

Simply Wall St.11-11

Evolution Mining's (ASX:EVN) stock is up by a considerable 29% over the past three months. But the company's key financial indicators appear to be differing across the board and that makes us question...

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But the company's key financial indicators appear to be differing across the board and that makes us question...</p>\n\n<a href=\"https://finance.yahoo.com/news/evolution-mining-limiteds-asx-evn-230710150.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance_au","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Evolution Mining Limited's (ASX:EVN) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEvolution Mining Limited's (ASX:EVN) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-11 07:07 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/evolution-mining-limiteds-asx-evn-230710150.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Evolution Mining's (ASX:EVN) stock is up by a considerable 29% over the past three months. But the company's key financial indicators appear to be differing across the board and that makes us question...</p>\n\n<a href=\"https://finance.yahoo.com/news/evolution-mining-limiteds-asx-evn-230710150.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":"BK4213","symbol_name":"石油与天然气的勘探与生产","start_time":0,"source_url":"https://finance.yahoo.com/news/evolution-mining-limiteds-asx-evn-230710150.html","article_id":"2482154912","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/_FLMy5r6pGRtUOoOjwDsbg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/ac0a63841d27e37fc446085397769944"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2482154912","pubTimestamp":1731280030,"sourceInfo":{"source_id":"yahoofinance_au","name":"Yahoo Finance AU"},"weMediaInfo":null,"summary":"Evolution Mining's  stock is up by a considerable 29% over the past three months. 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. In this article, we decided to focus on Evolution Mining's  ROE.Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.Return on Equity = Net Profit  ÷ Shareholders' Equity. When you first look at it, Evolution Mining's ROE doesn't look that attractive. However, its ROE is similar to the industry average of 12%, so we won't completely dismiss the company. Still, Evolution Mining has seen a flat net income growth over the past five years. Remember, the company's ROE is not particularly great to begin with. Hence, this provides some context to the flat e","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4213":"石油与天然气的勘探与生产","EVN.AU":"EVOLUTION MINING LTD","EVN":"Eaton Vance Municipal Income Tru","BK7104":"黄金","BK7506":"金矿股","EPM":"Evolution Petroleum"},"translate_title":"Evolution Mining Limited(ASX：EVN)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":{"EPM":1,"EVN":1,"EVN.AU":1},"content_text":"Evolution Mining's (ASX:EVN) stock is up by a considerable 29% over the past three months. 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. In this article, we decided to focus on Evolution Mining's  ROE. \n Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. \n View our latest analysis for Evolution Mining \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 Evolution Mining is:\n10% = AU$422m ÷ AU$4.1b (Based on the trailing twelve months to June 2024).\n The 'return' is the income the business earned over the last year. Another way to think of that is that for every A$1 worth of equity, the company was able to earn A$0.10 in profit. \n What Has ROE Got To Do With Earnings Growth? \n Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. \n Evolution Mining's Earnings Growth And 10% ROE \n When you first look at it, Evolution Mining's ROE doesn't look that attractive. However, its ROE is similar to the industry average of 12%, so we won't completely dismiss the company. Still, Evolution Mining has seen a flat net income growth over the past five years. Remember, the company's ROE is not particularly great to begin with. Hence, this provides some context to the flat earnings growth seen by the company. \n Next, on comparing with the industry net income growth, we found that the industry grew its earnings by 21% over the last few years. \n\n\n\n  ASX:EVN Past Earnings Growth November 10th 2024\n \n\n The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Evolution Mining is trading on a high P/E or a low P/E, relative to its industry. \n Is Evolution Mining Using Its Retained Earnings Effectively? \n Despite having a moderate three-year median payout ratio of 45% (meaning the company retains55% of profits) in the last three-year period, Evolution Mining's earnings growth was more or les flat. So there could be some other explanation in that regard. For instance, the company's business may be deteriorating. \n In addition, Evolution Mining has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth. Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to drop to 33% over the next three years. The fact that the company's ROE is expected to rise to 14% over the same period is explained by the drop in the payout ratio. \n Conclusion \n On the whole, we feel that the performance shown by Evolution Mining 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. Having said that, looking at current analyst estimates, we found that the company's earnings growth rate is expected to see a huge improvement. 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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