Is The Hershey Company's (NYSE:HSY) ROE Of 42% Impressive?

Simply Wall St.12-22 22:00

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. To keep the lesson ...

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To keep the lesson ...</p>\n\n<a href=\"https://finance.yahoo.com/news/hershey-companys-nyse-hsy-roe-140027028.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":"NYSE","symbol_name":"纽交所","start_time":0,"source_url":"https://finance.yahoo.com/news/hershey-companys-nyse-hsy-roe-140027028.html","article_id":"2493244623","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/PfwIuCLz.FyUs9V2w7J.FQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/e15b0d88b0885067ee46b65c5e0ec0bd"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2493244623","pubTimestamp":1734876027,"columns":[],"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. To keep the lesson grounded in practicality, we'll use ROE to better understand The Hershey Company .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 short, ROE shows the profit each dollar generates with respect to its shareholder investments.So, based on the above formula, the ROE for Hershey is:. Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. Companies that can achieve high returns on equity without too much debt are generally of good quality. If two companies have the same ROE, then I wou","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NYSE":"纽交所","BK4532":"文艺复兴科技持仓","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4504":"桥水持仓","BK4585":"ETF&股票定投概念","HSY":"好时","ROE":"ASTORIA US QUALITY KINGS ETF","BK4588":"碎股","BK4212":"包装食品与肉类"},"translate_title":"好时公司(NYSE：HSY)42%的ROE令人印象深刻吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"HSY":1,"NYSE":1,"ROE":1},"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. To keep the lesson grounded in practicality, we'll use ROE to better understand The Hershey Company (NYSE:HSY). \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 short, ROE shows the profit each dollar generates with respect to its shareholder investments. \n View our latest analysis for Hershey \n How To Calculate Return On Equity? \n Return on equity 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 Hershey is:\n42% = US$1.8b ÷ US$4.2b (Based on the trailing twelve months to September 2024).\n The 'return' is the income the business earned over the last year. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.42 in profit. \n Does Hershey 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. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As is clear from the image below, Hershey has a better ROE than the average (11%) in the Food industry. \n\n\n\n  NYSE:HSY Return on Equity December 22nd 2024\n \n\n That's what we like to see. Bear in mind, a high ROE doesn't always mean superior financial performance. A higher proportion of debt in a company's capital structure may also result in a high ROE, where the high debt levels could be a huge risk . \n Why You Should Consider Debt When Looking At ROE \n Most companies need money -- from somewhere -- to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first and second cases, the ROE will reflect this use of cash for investment in the business. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used. \n Combining Hershey's Debt And Its 42% Return On Equity \n Hershey does use a high amount of debt to increase returns. It has a debt to equity ratio of 1.24. There's no doubt the ROE is impressive, but it's worth keeping in mind that the metric could have been lower if the company were to reduce its debt. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it. \n Conclusion \n Return on equity is a useful indicator of the ability of a business to generate profits and return them to shareholders. Companies that can achieve high returns on equity without too much debt are generally of good quality. 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. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to check this FREE visualization of 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":"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":1},"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/2493244623"}