![]() We aim to bring you long-term focused analysis driven by fundamental data. 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 provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. This article by Simply Wall St is general in nature. Alternatively, email editorial-team (at). Have feedback on this article? Concerned about the content? Get in touch with us directly. 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. The latest industry analyst forecasts show that the company is expected to maintain its current growth rate. We do however feel that the earnings growth number could have been even higher, had the company been reinvesting more of its earnings and paid out less dividends. Carey has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Despite this, the company's earnings grew moderately as we saw above.Īdditionally, W. However, this is typical for REITs as they are often required by law to distribute most of their earnings. Carey seems to be paying out most of its income as dividends judging by its three-year median payout ratio of 84%, meaning the company retains only 16% of its income. Carey Making Efficient Use Of Its Profits? Such as - high earnings retention or an efficient management in place. Considering the moderately low ROE, it is quite possible that there might be some other aspects that are positively influencing the company's earnings growth. Carey reported a moderate 12% net income growth over the past five years. Yet, a closer study shows that the company's ROE is similar to the industry average of 6.8%. Carey's ROE doesn't look that attractive. 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. 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. So far, we've learned that ROE is a measure of a company's profitability. Why Is ROE Important For Earnings Growth? So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.06. The 'return' refers to a company's earnings over the last year. Carey is:ĥ.5% = US$489m ÷ US$8.8b (Based on the trailing twelve months to September 2022). So, based on the above formula, the ROE for W. Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity ROE can be calculated by using the formula: Simply put, it is used to assess the profitability of a company in relation to its equity capital. 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 this article, we decided to focus on W. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to study its financial indicators more closely to see if they had a hand to play in the recent price move. Carey's (NYSE:WPC) stock increased significantly by 14% over the past three months. Most readers would already be aware that W.
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