Can Stagwell Inc. (NASDAQ:STGW) Improve Its Returns?

Simply Wall St.11-10

While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. By way of learning-...

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(NASDAQ:STGW) Improve Its Returns?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-10 21:59 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/stagwell-inc-nasdaq-stgw-improve-135924942.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. By way of learning-...</p>\n\n<a href=\"https://finance.yahoo.com/news/stagwell-inc-nasdaq-stgw-improve-135924942.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":"STGW","symbol_name":"Stagwell Inc.","start_time":0,"source_url":"https://finance.yahoo.com/news/stagwell-inc-nasdaq-stgw-improve-135924942.html","article_id":"2482269701","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/_9EAYQzz7lxwJ6vgslF8Uw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/ae61b9d9279ae16dce370df1ad69157b"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2482269701","pubTimestamp":1731247164,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"While some investors are already well versed in financial metrics , this article is for those who would like to learn about Return On Equity  and why it is important. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Stagwell Inc. .Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits.So, based on the above formula, the ROE for Stagwell is:. Combining Stagwell's Debt And Its 7.3% Return On Equity. Return on equity is useful for comparing the quality of different businesses. A company that can achieve a high return on equity without debt could be considered a high quality business. If two co","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"STGW":"Stagwell Inc.","SQQQ":"纳指三倍做空ETF","BK4112":"金融交易所和数据","TQQQ":"纳指三倍做多ETF","BK4585":"ETF&股票定投概念","QID":"纳指两倍做空ETF","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","BK4009":"广告","ROE":"ASTORIA US QUALITY KINGS ETF","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","LU1169590202.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"I\" (USD) ACC","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H","LU1169589451.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"A\" (USD) ACC","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","BK4588":"碎股","QLD":"纳指两倍做多ETF","IE00B64PRP62.GBP":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC",".IXIC":"NASDAQ Composite","NDAQ":"纳斯达克OMX交易所","PSQ":"纳指反向ETF","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","IE00BGHQF748.EUR":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (EUR) ACC"},"translate_title":"Stagwell Inc.（纳斯达克股票代码：STGW）能否提高其回报？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"STGW":1,"ROE":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":"While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. By way of learning-by-doing, we'll look at ROE to gain a better understanding of Stagwell Inc. (NASDAQ:STGW). \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. Put another way, it reveals the company's success at turning shareholder investments into profits. \n View our latest analysis for Stagwell \n How Do You Calculate Return On Equity? \n The formula for ROE is: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Stagwell is:\n7.3% = US$56m ÷ US$763m (Based on the trailing twelve months to September 2024).\n The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.07 in profit. \n Does Stagwell Have A Good ROE? \n One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As shown in the graphic below, Stagwell has a lower ROE than the average (11%) in the Media industry classification. \n\n\n\n  NasdaqGS:STGW Return on Equity November 10th 2024\n \n\n That certainly isn't ideal. However, a low ROE is not always bad. If the company's debt levels are moderate to low, then there's still a chance that returns can be improved via the use of financial leverage. A company with high debt levels and low ROE is a combination we like to avoid given the risk involved. To know the 2 risks we have identified for Stagwell visit our risks dashboard for free. \n How Does Debt Impact Return On Equity? \n Most companies need money -- from somewhere -- to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. Thus the use of debt can improve ROE, albeit along with extra risk in the case of stormy weather, metaphorically speaking. \n Combining Stagwell's Debt And Its 7.3% Return On Equity \n It's worth noting the high use of debt by Stagwell, leading to its debt to equity ratio of 1.92. Its ROE is quite low, even with the use of significant debt; that's not a good result, in our opinion. 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 Conclusion \n Return on equity is useful for comparing the quality of different businesses. 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 Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So you might want to check this FREE visualization of analyst forecasts for the company. \n Of course Stagwell may not be the best stock to buy. So you may wish to see this free collection of other companies that have high ROE and low debt. \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":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","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":"4.29.3","shortVersion":"4.29.3","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/2482269701"}