The National Agricultural Development Company (TADAWUL:6010) On An Uptrend: Could Fundamentals Be Driving The Stock?
The National Agricultural Development Company (TADAWUL:6010) On An Uptrend: Could Fundamentals Be Driving ... Simply Wall St
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Stock Analysis: National Agricultural Development’s ROE and Sustainable Development Goals (SDGs)
Most readers would already know that National Agricultural Development’s (TADAWUL:6010) stock increased by 6.4% over the past three months. 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. Particularly, we will be paying attention to National Agricultural Development’s ROE today.
How Do You Calculate Return On Equity?
The formula for ROE is:
- Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for National Agricultural Development is:
- 8.4% = ر.س302m ÷ ر.س3.6b (Based on the trailing twelve months to December 2023).
Why Is ROE Important For Earnings Growth?
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. 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.
National Agricultural Development’s Earnings Growth And 8.4% ROE
It is hard to argue that National Agricultural Development’s ROE is much good in and of itself. Not just that, even compared to the industry average of 12%, the company’s ROE is entirely unremarkable. Although, we can see that National Agricultural Development saw a modest net income growth of 15% 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.
We then performed a comparison between National Agricultural Development’s net income growth with the industry, which revealed that the company’s growth is similar to the average industry growth of 15% in the same 5-year period.
Is National Agricultural Development Making Efficient Use Of Its Profits?
National Agricultural Development doesn’t pay any regular dividends, meaning that all of its profits are being reinvested in the business, which explains the fair bit of earnings growth the company has seen.
Summary
On the whole, we do feel that National Agricultural Development has some positive attributes. With a high rate of reinvestment, albeit at a low ROE, the company has managed to see considerable growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company’s earnings growth is expected to slow down. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
Valuation is complex, but we’re helping make it simple.
Find out whether National Agricultural Development is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions, and financial health.
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.
SDGs, Targets, and Indicators Analysis
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 8: Decent Work and Economic Growth
- SDG 9: Industry, Innovation, and Infrastructure
- SDG 12: Responsible Consumption and Production
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
- SDG 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries
- SDG 12.2: By 2030, achieve the sustainable management and efficient use of natural resources
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- ROE (Return on Equity)
- Net Profit
- Shareholders’ Equity
- Earnings Growth
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 8: Decent Work and Economic Growth | SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries | ROE (Return on Equity) |
| SDG 9: Industry, Innovation, and Infrastructure | SDG 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries | Earnings Growth |
| SDG 12: Responsible Consumption and Production | SDG 12.2: By 2030, achieve the sustainable management and efficient use of natural resources | Net Profit, Shareholders’ Equity |
Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: simplywall.st
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