Latest news with #RCLFoods'
Yahoo
11-04-2025
- Business
- Yahoo
Has RCL Foods Limited (JSE:RCL) Stock's Recent Performance Got Anything to Do With Its Financial Health?
Most readers would already know that RCL Foods' (JSE:RCL) stock increased by 4.8% over the past week. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to investigate if the company's decent financials had a hand to play in the recent price move. In this article, we decided to focus on RCL Foods' ROE. ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Put another way, it reveals the company's success at turning shareholder investments into profits. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. 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 RCL Foods is: 15% = R1.5b ÷ R10b (Based on the trailing twelve months to December 2024). The 'return' is the income the business earned over the last year. That means that for every ZAR1 worth of shareholders' equity, the company generated ZAR0.15 in profit. View our latest analysis for RCL Foods So far, we've learned that ROE is a measure of a company's profitability. 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. When you first look at it, RCL Foods' ROE doesn't look that attractive. However, given that the company's ROE is similar to the average industry ROE of 14%, we may spare it some thought. Moreover, we are quite pleased to see that RCL Foods' net income grew significantly at a rate of 45% over the last five years. Given the slightly low ROE, it is likely that there could be some other aspects that are driving this growth. For instance, the company has a low payout ratio or is being managed efficiently. Next, on comparing with the industry net income growth, we found that the growth figure reported by RCL Foods compares quite favourably to the industry average, which shows a decline of 1.9% over the last few years. Earnings growth is an important metric to consider when valuing a stock. 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. Is RCL Foods fairly valued compared to other companies? These 3 valuation measures might help you decide. RCL Foods' three-year median payout ratio is a pretty moderate 36%, meaning the company retains 64% of its income. This suggests that its dividend is well covered, and given the high growth we discussed above, it looks like RCL Foods is reinvesting its earnings efficiently. Additionally, RCL Foods 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. In total, it does look like RCL Foods has some positive aspects to its business. 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. 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 1 risk we have identified for RCL Foods 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.
Yahoo
06-03-2025
- Business
- Yahoo
Here's Why We Think RCL Foods (JSE:RCL) Is Well Worth Watching
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away. So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like RCL Foods (JSE:RCL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide RCL Foods with the means to add long-term value to shareholders. See our latest analysis for RCL Foods If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. RCL Foods managed to grow EPS by 8.6% per year, over three years. That growth rate is fairly good, assuming the company can keep it up. Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. RCL Foods' EBIT margins have actually improved by 4.5 percentage points in the last year, to reach 7.5%, but, on the flip side, revenue was down 32%. That falls short of ideal. You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image. While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check RCL Foods' balance sheet strength, before getting too excited. Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions. The first bit of good news is that no RCL Foods insiders reported share sales in the last twelve months. But the really good news is that CEO & Executive Director P. Cruickshank spent R6.3m buying stock, at an average price of around R9.22. It seems at least one insider thinks that the company is doing well - and they are backing that view with cash. One positive for RCL Foods is that it is growing EPS. That's nice to see. It's not easy for business to grow EPS, but RCL Foods has shown the strengths to do just that. The icing on the cake is that an insider bought shares during the year; a point of interest for people who will want to keep a watchful eye on this stock. Still, you should learn about the 1 warning sign we've spotted with RCL Foods. There are plenty of other companies that have insiders buying up shares. So if you like the sound of RCL Foods, you'll probably love this curated collection of companies in ZA that have an attractive valuation alongside insider buying in the last three months. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction. 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.
