Do Its Financials Have Any Role To Play In Driving Aktor Societe Anonyme Holding Company Technical and Energy Projects' (ATH:AKTR) Stock Up Recently?

Most readers would already be aware that Aktor Societe Anonyme Holding Company Technical and Energy Projects' (ATH:AKTR) stock increased significantly by 46% 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 study its financial indicators more closely to see if they had a hand to play in the recent price move. Particularly, we will be paying attention to Aktor Societe Anonyme Holding Company Technical and Energy Projects' ROE today.

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. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

How Do You Calculate Return On Equity?

The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for Aktor Societe Anonyme Holding Company Technical and Energy Projects is:

2.4% = €9.2m ÷ €382m (Based on the trailing twelve months to June 2025).

The 'return' is the yearly profit. So, this means that for every €1 of its shareholder's investments, the company generates a profit of €0.02.

See our latest analysis for Aktor Societe Anonyme Holding Company Technical and Energy Projects

What Has ROE Got To Do With Earnings Growth?

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.

Aktor Societe Anonyme Holding Company Technical and Energy Projects' Earnings Growth And 2.4% ROE

It is quite clear that Aktor Societe Anonyme Holding Company Technical and Energy Projects' ROE is rather low. Even when compared to the industry average of 3.5%, the ROE figure is pretty disappointing. In spite of this, Aktor Societe Anonyme Holding Company Technical and Energy Projects was able to grow its net income considerably, at a rate of 43% in the last five years. Therefore, there could be other reasons behind this growth. For instance, the company has a low payout ratio or is being managed efficiently.

As a next step, we compared Aktor Societe Anonyme Holding Company Technical and Energy Projects' net income growth with the industry and found that the company has a similar growth figure when compared with the industry average growth rate of 43% in the same period.

Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Aktor Societe Anonyme Holding Company Technical and Energy Projects is trading on a high P/E or a low P/E, relative to its industry.

Is Aktor Societe Anonyme Holding Company Technical and Energy Projects Making Efficient Use Of Its Profits?

Given that Aktor Societe Anonyme Holding Company Technical and Energy Projects doesn't pay any regular dividends to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.

Summary

In total, it does look like Aktor Societe Anonyme Holding Company Technical and Energy Projects has some positive aspects to its business. Despite its low rate of return, the fact that the company reinvests a very high portion of its profits into its business, no doubt contributed to its high earnings growth. 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. Our risks dashboard would have the 2 risks we have identified for Aktor Societe Anonyme Holding Company Technical and Energy Projects.

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.