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Cerrado Gold Inc.'s (CVE:CERT) Stock On An Uptrend: Could Fundamentals Be Driving The Momentum?
Cerrado Gold (CVE:CERT) has had a great run on the share market with its stock up by a significant 36% over the last month. We wonder if and what role the company's financials play in that price change as a company's long-term fundamentals usually dictate market outcomes. Specifically, we decided to study Cerrado Gold's ROE in this article. 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. Put another way, it reveals the company's success at turning shareholder investments into profits. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. How Do You Calculate Return On Equity? Return on equity can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Cerrado Gold is: 3.8% = US$1.8m ÷ US$47m (Based on the trailing twelve months to March 2025). The 'return' is the amount earned after tax over the last twelve months. Another way to think of that is that for every CA$1 worth of equity, the company was able to earn CA$0.04 in profit. Check out our latest analysis for Cerrado Gold What Is The Relationship Between ROE And Earnings Growth? So far, we've learned that ROE is a measure of a company's profitability. 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. 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. Cerrado Gold's Earnings Growth And 3.8% ROE As you can see, Cerrado Gold's ROE looks pretty weak. Not just that, even compared to the industry average of 10%, the company's ROE is entirely unremarkable. However, we we're pleasantly surprised to see that Cerrado Gold grew its net income at a significant rate of 22% in the last five years. Therefore, there could be other reasons behind this growth. Such as - high earnings retention or an efficient management in place. Next, on comparing with the industry net income growth, we found that Cerrado Gold's growth is quite high when compared to the industry average growth of 18% in the same period, which is great to see. Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. Is Cerrado Gold fairly valued compared to other companies? These 3 valuation measures might help you decide. Is Cerrado Gold Making Efficient Use Of Its Profits? Cerrado Gold doesn't pay any regular dividends to its shareholders, meaning that the company has been reinvesting all of its profits into the business. This is likely what's driving the high earnings growth number discussed above. Conclusion In total, it does look like Cerrado Gold has some positive aspects to its business. With a high rate of reinvestment, albeit at a low ROE, the company has managed to see a considerable growth in its earnings. While we won't completely dismiss the company, what we would do, is try to ascertain how risky the business is to make a more informed decision around the company. You can see the 3 risks we have identified for Cerrado Gold by visiting our risks dashboard for free on our platform here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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.
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Mercer International Second Quarter 2025 Earnings: US$1.29 loss per share (vs US$1.01 loss in 2Q 2024)
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Berkshire takes Kraft Heinz writedown, operating profit falls
(Reuters) -Warren Buffett's Berkshire Hathaway (BRK-A) (BRK-B) on Saturday wrote down part of its investment in Kraft Heinz (KHC), and reported a 4% decline in second-quarter operating profit as premiums from insurance underwriting fell. Berkshire also reported a 59% decline in net income, reflecting lower overall investment gains from its common stock holdings, as well as the Kraft Heinz writedown. Operating income totaled $11.16 billion, or about $7,760 per Class A share, compared with $11.6 billion a year earlier. Net income fell to $12.37 billion from $30.35 billion. Errore nel recupero dei dati Effettua l'accesso per consultare il tuo portafoglio Errore nel recupero dei dati Errore nel recupero dei dati Errore nel recupero dei dati Errore nel recupero dei dati
