The growth of return on average equity:United Electronics Company , listed on Tadawul, return on average equity increased by 668.
59 percent, from (3.82) percent during the corresponding period to 21.72 percent by the end of the current TTM period. Return on equity: TTM period ended:September 2016September 2017Change (%)Extra(3.82)21.
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72668.59Return on equity drivers:Decomposing the drivers of return on average equity would enable us to find out the resaons behind that increase. Return on average equity drivers:TTM period ended Return on net operating assets “RNOA”Return on net non- operating assets”RNNOASep.
2016(4.50)0.68Return on net operating assets:The company’s return on net operating assets rose by 506 percent from (4.
50) percent to 18.27 percent by the end of TTM period ended in last September, and contributed by 84.12 as a percentage from return on equity. This growth in return on net operating assets is only produced by the increase of net operating profit after- tax from a loss reached (22,20) million riyals to 111,38 million riyals and that pushed net operating profit margin to jump from (0.61) percent to 2.80 percent.
Return on net non-operating assets:The contribution of return from non-operating assets to return on equity increased from 0.68 percent to 3.45 percent and represents 15.88 as a percentage from return on equity. This improvement of non-operating assets contribution was due to the increase of operating spread to 16.92 percent and to the rise of financial leverage to 20.41 percent as well. RNNOA: TTM period ended:Net borrowing cost”NBC”Financial leverage”FLEV”Operating spreadSep.
201612.64(3.95)(17.14)Important ratios of share:The company’s stock is traded at a P/E of 18.05x, the PEG is between zero and one at 0.03x because of the growth of earnings which is higher than P/E , so considered underpriced stock.
TTM Period ended in September 2017Earnings per share (EPS?)Price of sharePrice to Earnings(P/E)P/E to growth(PEG)Extra2.6247.3018.05×0.03xDisclosure:”I wrote this article myself, and it expresses my own opinions.I am not receiving compensation for it.I have no business relationship with any company whose stock is mentioned in this article.