Are Sea Limited's (NYSE:SE) Mixed Financials Driving The Negative Sentiment?

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Are Sea Limited's (NYSE:SE) Mixed Financials Driving The Negative Sentiment?

Simply Wall St.2023-10-03

It is hard to get excited after looking at Sea's (NYSE:SE) recent performance, when its stock has declined 24% over the past three months. It is possible that the markets have ignored the company's ...

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GrassWoodAll
·2023-10-03
You got ignored the q3 lose last year, which most likely will be positive this q3
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It is possible that the markets have ignored the company's ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/media/nyse-se/sea/news/are-sea-limiteds-nysese-mixed-financials-driving-the-negativ\">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":"SG9999001135.SGD","symbol_name":"United ASEAN Fund SGD","start_time":0,"source_url":"https://simplywall.st/stocks/us/media/nyse-se/sea/news/are-sea-limiteds-nysese-mixed-financials-driving-the-negativ","article_id":"2372890186","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/8043000-choice2-main-header/1585186922048"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2372890186","pubTimestamp":1696335058,"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"It is hard to get excited after looking at Sea's (NYSE:SE) recent performance, when its stock has declined 24% over the...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"SG9999001135.SGD":"United ASEAN Fund SGD","BK4551":"寇图资本持仓","SE":"Sea Ltd","LU0048573645.USD":"富达东盟基金","BK4581":"高盛持仓","SG9999014492.USD":"NIKKO AM ASEAN EQUITY \"A\" (USD) ACC","BK4085":"互动家庭娱乐","LU0210637038.USD":"HSBC GIF THAI EQUITY \"AD\" INC","SG9999002414.USD":"LIONGLOBAL SINGAPORE TRUST (USD) ACC","BK4548":"巴美列捷福持仓","SG9999013486.USD":"LIONGLOBAL SINGAPORE DIVIDEND EQUITY (USD) INC A","LU0532188223.SGD":"JPMorgan Funds - ASEAN Equity A (acc) SGD","SG9999002679.SGD":"LionGlobal Singapore Balanced SGD","BK4554":"元宇宙及AR概念","SGXZ58947870.SGD":"LIONGLOBAL SINGAPORE DIVIDEND EQUITY (SGDHDG) INC","SG9999002620.SGD":"LionGlobal South East Asia SGD","SG9999014484.SGD":"Nikko AM ASEAN Equity Fund A SGD","LU0251143029.SGD":"Fidelity ASEAN A-SGD","BK4585":"ETF&股票定投概念","SG9999004360.SGD":"Nikko AM Shenton Thrift Fund SGD","BK4503":"景林资产持仓","BK4566":"资本集团","SG9999013460.SGD":"LionGlobal Singapore Dividend Equity Fund SGD","SG9999002406.SGD":"利安新加坡信托基金","BK4535":"淡马锡持仓","SG9999013478.USD":"利安新加坡股息基金","SG9999006266.SGD":"MANULIFE SINGAPORE EQUITY \"A\" (SGD) ACC","IE0034224299.USD":"PINEBRIDGE ASIA EX JAPAN EQUITY \"A\" (USD) ACC","BK4588":"碎股","SG9999002604.SGD":"LionGlobal Singapore/Malaysia SGD","NYSE":"纽交所","SG9999005177.SGD":"Legg Mason Martin Currie - Southeast Asia Trust A Acc SGD"},"translate_title":"Sea Limited（纽约证券交易所代码：SE）喜忧参半的财务状况是否推动了负面情绪？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SE":1,"NYSE":1},"content_text":"It is hard to get excited after looking at Sea's (NYSE:SE) recent performance, when its stock has declined 24% over the past three months.   It is possible that the markets have ignored the company's differing financials and decided to lean-in to the negative sentiment.  Long-term fundamentals are usually what drive market outcomes, so it's worth paying close attention.     Particularly, we will be paying attention to Sea's  ROE today.    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 other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.  Check out our latest analysis for Sea  How Is ROE Calculated?  The formula for return on equity is:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Sea is:4.1% = US$272m ÷ US$6.6b (Based on the trailing twelve months to June 2023). The 'return' is the income the business earned over the last year.  Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.04 in profit.   Why Is ROE Important For Earnings Growth?  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 all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.  Sea's Earnings Growth And 4.1% ROE  It is hard to argue that Sea's ROE is much good in and of itself.   Even compared to the average industry ROE of 12%, the company's ROE is quite dismal.   For this reason, Sea's five year net income decline of 7.3% is not surprising given its lower ROE.  We believe that there also might be other aspects that are negatively influencing the company's earnings prospects.  For instance, the company has a very high payout ratio, or is faced with competitive pressures.     However, when we compared Sea's growth with the industry we found that while the company's earnings have been shrinking, the industry has seen an earnings growth of 13% in the same period. This is quite worrisome.   NYSE:SE Past Earnings Growth October 3rd 2023 The basis for attaching value to a company is, to a great extent, tied to its earnings growth.  It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline).   This then helps them determine if the stock is placed for a bright or bleak future.    Has the market priced in the future outlook for SE? You can find out in our latest intrinsic value infographic research report.   Is Sea Using Its Retained Earnings Effectively?    Sea doesn't pay any dividend, meaning that potentially all of its profits are being reinvested in the business, which doesn't explain why the company's earnings have shrunk if it is retaining all of its profits.  So there could be some other explanations in that regard. For instance, the company's business may be deteriorating.     Summary    Overall, we have mixed feelings about Sea.      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.       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.     Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. Valuation is complex, but we're helping make it simple.Find out whether Sea is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave 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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