Are SFP Tech Holdings Berhad's (KLSE:SFPTECH) Fundamentals Good Enough to Warrant Buying Given The Stock's Recent Weakness?
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
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.
ROE 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 SFP Tech Holdings Berhad is:
4.4% = RM9.9m ÷ RM225m (Based on the trailing twelve months to March 2025).
The 'return' is the amount earned after tax over the last twelve months. That means that for every MYR1 worth of shareholders' equity, the company generated MYR0.04 in profit.
Check out our latest analysis for SFP Tech Holdings Berhad
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. 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.
As you can see, SFP Tech Holdings Berhad's ROE looks pretty weak. Even compared to the average industry ROE of 6.1%, the company's ROE is quite dismal. Although, we can see that SFP Tech Holdings Berhad saw a modest net income growth of 6.0% over the past five years. We reckon that there could be other factors at play here. For example, it is possible that the company's management has made some good strategic decisions, or that the company has a low payout ratio.
Next, on comparing SFP Tech Holdings Berhad's net income growth with the industry, we found that the company's reported growth is similar to the industry average growth rate of 5.3% over the last few years.
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. If you're wondering about SFP Tech Holdings Berhad's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
While the company did pay out a portion of its dividend in the past, it currently doesn't pay a regular dividend. We infer that the company has been reinvesting all of its profits to grow its business.
On the whole, we do feel that SFP Tech Holdings Berhad has some positive attributes. Even in spite of the low rate of return, the company has posted impressive earnings growth as a result of reinvesting heavily into its business. That being so, the latest analyst forecasts show that the company will continue to see an expansion in its earnings. 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.
Have 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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
31 minutes ago
- Yahoo
The Lovesac Company's (NASDAQ:LOVE) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?
Lovesac (NASDAQ:LOVE) has had a great run on the share market with its stock up by a significant 34% over the last three months. But the company's key financial indicators appear to be differing across the board and that makes us question whether or not the company's current share price momentum can be maintained. Specifically, we decided to study Lovesac's ROE in this article. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. 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. 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 Lovesac is: 6.8% = US$14m ÷ US$201m (Based on the trailing twelve months to May 2025). The 'return' refers to a company's earnings over the last year. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.07. View our latest analysis for Lovesac We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. 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. At first glance, Lovesac's ROE doesn't look very promising. Next, when compared to the average industry ROE of 15%, the company's ROE leaves us feeling even less enthusiastic. As a result, Lovesac reported a very low income growth of 4.0% over the past five years. As a next step, we compared Lovesac's net income growth with the industry and were disappointed to see that the company's growth is lower than the industry average growth of 11% in the same period. 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. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is LOVE fairly valued? This infographic on the company's intrinsic value has everything you need to know. Lovesac doesn't pay any regular dividends, meaning that potentially all of its profits are being reinvested in the business. However, this doesn't explain the low earnings growth the company has seen. So there could be some other explanation in that regard. For instance, the company's business may be deteriorating. Overall, we have mixed feelings about Lovesac. While the company does have a high rate of profit retention, its low rate of return is probably hampering its earnings growth. Having said that, looking at the current analyst estimates, we found that the company's earnings are expected to gain momentum. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. — Investing narratives with Fair Values Suncorp's Next Chapter: Insurance-Only and Ready to Grow By Robbo – Community Contributor Fair Value Estimated: A$22.83 · 0.1% Overvalued Thyssenkrupp Nucera Will Achieve Double-Digit Profits by 2030 Boosted by Hydrogen Growth By Chris1 – Community Contributor Fair Value Estimated: €14.40 · 0.3% Overvalued Tesla's Nvidia Moment – The AI & Robotics Inflection Point By BlackGoat – Community Contributor Fair Value Estimated: $359.72 · 0.1% Overvalued View more featured narratives — 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
38 minutes ago
- Yahoo
French President Macron announces 'historic' Airbus/Malaysia Airlines deal
PARIS (Reuters) -French President Emmanuel Macron said on Friday there had been an historic deal between Airbus and Malaysia, as Macron hosted Malaysian Prime Minister Anwar Ibrahim in Paris. Macron said such deals highlighted the importance of trade between France and Asia, as Europe faces up to likely tariffs from U.S President Donald Trump. "I am thinking of the projects signed in the key minerals sector, in the rare earths sector with the company Carester which has just opened up a factory in the region of Lacq, the transport sector with this historic co-operation between Malaysia Airlines and Airbus, and in the energy transition sector," said Macron. Industry sources told Reuters this week that Airbus was close to winning an order from Malaysia Aviation Group for more A330neo long-haul jets. "Airbus has been our focus. Malaysian Airlines 20, and AirAsia another 50," added Ibrahim. Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Conagra Brands Is Down 24% This Year. Why Applied Game Theory Suggests CAG Stock Is Worth Another Look.
Consumer packaged goods giant Conagra Brands (CAG) will release its earnings report for its fiscal fourth quarter on June 10. By perhaps most indications, investors are anxiously biting their fingernails. Since the start of the year, CAG stock dropped nearly 24%, reflecting sustained negativity. Indeed, since CAG collapsed in October last year, it really hasn't been able to inspire investor confidence. Much of the erosion centers on the challenging economic environment and the structural headwinds that have materialized. As Barchart's Neha Panjwani wrote, 'Conagra's underperformance is attributed to lower sales and weaker performance across all segments. Management blames supply constraints limiting shipments to retailers rather than a slowdown in consumer demand. Consumption lagged shipments, and volume is still under pressure due to ongoing supply chain challenges. Furthermore, consumers are turning to private-label brands to offset inflation impact.' GE Aerospace Bear Put Spread Could Return 208% in the Next Few Months Huge Unusual Volume in Pfizer Put Options Signals Investors Bullish Outlook IBIT Covered Calls: 2 Smart Strategies for Crypto-Linked Income Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. Unfortunately, neither investors nor analysts are buying into management's constructive framing of the company's difficulties. Presently, CAG stock carries a Hold assessment from Wall Street analysts. What's even more telling, only two experts rate CAG favorably (with both ratings being Strong Buys). About the only real positive is that the consensus price target is $24.22, implying growth of around 14.6%. Still, that's where the good news ends, at least on the surface level. Per the Barchart Technical Opinion algorithm, CAG stock rates as a 100% Sell. If that wasn't warning enough, options flow — which focuses on big block transactions likely placed by institutional investors — sat at $22,400 below parity, favoring the bears. The biggest transaction by dollar volume was for bought puts expiring July 18, indicating direct bearishness. That's because for debit-based strategies to be successful, the underlying security must reach predetermined profitability thresholds. Although fundamental narratives provide important color and context, they lack specificity. Traders (especially options traders) require a thesis to not only cover the magnitude component (y-axis) but also the time element (x-axis). In other words, traders live in a world of probabilities. It's here that the game of blackjack — and specifically the card-counting strategy — is instructive. Professional blackjack players keep a running count in their heads of the cards that have been dealt, separating individual cards into three distinct states: positive value, neutral value, negative value. Essentially, the idea is to bet large when the odds favor the player and bet small when the odds favor the dealer. However, knowing when it's advantageous to strike requires the player to calculate two types of probabilities: derivative and conditional. Derivative probabilities calculate outcome odds across the dataset's entire distribution, which can also be viewed as a Gaussian framework. Conditional probabilities calculate outcome odds for a specific circumstance, forming the basis for Markovian analysis. Under a Markovian principle, a blackjack player will estimate the likelihood of the current hand being favorable or not. Enticingly, the same principle can be applied to the stock market but this is where I'd say 99.99% of financial experts get tripped up: Markovian principles really work best when applied to discrete events. Share price and its derivatives are not discrete but are rather continuous scalar signals and are inappropriate for applying the framework invented by Russian mathematician Andrey Markov. To remedy this matter, we can convert share price into market breadth or sequences of accumulative and distributive sessions. As a representation of demand, market breadth is effectively binary and thus lends itself to easy categorization and quantification. These attributes then facilitate conditionally probabilistic analysis. Currently, CAG stock is printing a compelling quantitative signal: a 2-8-D sequence or two up weeks and eight down weeks across the 10-week period. Admittedly, this conversion process compresses CAG's magnitude dynamism into a simple binary code. But the benefit is that we can now segregate market behaviors into distinct, discrete demand profiles. From past analogs, we know that when the 2-8-D sequence flashes, there's a 54.55% chance that the price action for the following week (which corresponds with the business week beginning July 7) results in upside, with a median return of 2.54%. Should the bulls maintain control for a second week, investors may anticipate an additional performance boost of 1.23%. Granted, a 54.55% upside success ratio isn't much of an advantage — until you consider that CAG stock actually has a negative bias when viewed from a Gaussian lens. Based on the market intelligence above, intrepid speculators may consider the 21/22 bull call spread expiring July 25. This transaction involves buying the $21 call and simultaneously selling the $22 call, for a net debit paid of $55 (the most that can be lost in the trade). Should CAG stock rise through the short strike price ($22) at expiration, the maximum reward is $45, a payout of nearly 82%. What makes this trade intriguing is that, if the bulls can sustain the sentiment reversal implied by the 2-8-D sequence, CAG stock should be able to reach $22, if not clear it at expiration. Further, the breakeven price for this trade is $21.55, which is within reason based on past analogs. Finally, as a baseline, the chance that CAG will be profitable on any given week is only 49.71%, thus incentivizing a bullish posture in response to the aforementioned sequence. On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
