Magnite, Inc.'s (NASDAQ:MGNI) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?

Simply Wall St.11-09

Most readers would already be aware that Magnite's (NASDAQ:MGNI) stock increased significantly by 13% over the past month. However, we decided to pay attention to the company's fundamentals which don'...

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However, we decided to pay attention to the company's fundamentals which don'...</p>\n\n<a href=\"https://finance.yahoo.com/news/magnite-inc-nasdaq-mgni-stock-134253362.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":"LU2095319765.USD","symbol_name":"Natixis Thematics Subscription Economy R/A USD","start_time":0,"source_url":"https://finance.yahoo.com/news/magnite-inc-nasdaq-mgni-stock-134253362.html","article_id":"2482425739","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/00OqBzbQM9NM6aQKBzc4vA--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/992331fc596d921e34ccfa3b8813259a"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2482425739","pubTimestamp":1731159773,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Most readers would already be aware that Magnite's  stock increased significantly by 13% over the past month. 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Assuming everything else remains unchanged, the higher the ROE and p","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","QID":"纳指两倍做空ETF","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","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","IE00BGHQF748.EUR":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (EUR) ACC","PSQ":"纳指反向ETF","MGNI":"Magnite, Inc.","QLD":"纳指两倍做多ETF","TQQQ":"纳指三倍做多ETF","BK4585":"ETF&股票定投概念","SQQQ":"纳指三倍做空ETF","NDAQ":"纳斯达克OMX交易所","BK4009":"广告","BK4588":"碎股",".IXIC":"NASDAQ Composite"},"translate_title":"Magnite，Inc.（纳斯达克：MGNI）的股票正在飙升，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":{"NDAQ":1,"MGNI":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 Magnite's (NASDAQ:MGNI) stock increased significantly by 13% over the past month. However, we decided to pay attention to the company's fundamentals which don't appear to give a clear sign about the company's financial health. Particularly, we will be paying attention to Magnite's  ROE today. \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 other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. \n Check out our latest analysis for Magnite \n How To 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 Magnite is:\n2.4% = US$17m ÷ US$726m (Based on the trailing twelve months to September 2024).\n The 'return' is the profit over the last twelve months. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.02. \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. Depending on how much of these profits the company reinvests or \"retains\", and how effectively it does so, we are then able to assess a company’s earnings growth potential. 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 Magnite's Earnings Growth And 2.4% ROE \n As you can see, Magnite's ROE looks pretty weak. Not just that, even compared to the industry average of 11%, the company's ROE is entirely unremarkable. Therefore, it might not be wrong to say that the five year net income decline of 26% seen by Magnite was possibly a result of it having a lower ROE. However, there could also be other factors causing the earnings to decline. For example, the business has allocated capital poorly, or that the company has a very high payout ratio. \n That being said, we compared Magnite's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 4.3% in the same 5-year period. \n\n\n\n  NasdaqGS:MGNI Past Earnings Growth November 9th 2024\n \n\n The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. This then helps them determine if the stock is placed for a bright or bleak future. If you're wondering about Magnite's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry. \n Is Magnite Efficiently Re-investing Its Profits? \n Magnite 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. It looks like there might be some other reasons to explain the lack in that respect. For example, the business could be in decline. \n Summary \n Overall, we have mixed feelings about Magnite. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. \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":"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":"4.29.1","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/2482425739"}