Are Robust Financials Driving The Recent Rally In Elvalhalcor Hellenic Copper and Aluminium Industry S.A.'s (ATH:ELHA) Stock?

Elvalhalcor Hellenic Copper and Aluminium Industry (ATH:ELHA) has had a great run on the share market with its stock up by a significant 27% over the last three months. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. Specifically, we decided to study Elvalhalcor Hellenic Copper and Aluminium Industry's ROE in this article.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

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How Do You Calculate Return On Equity?

ROE 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 Elvalhalcor Hellenic Copper and Aluminium Industry is:

12% = €133m ÷ €1.1b (Based on the trailing twelve months to June 2025).

The 'return' is the amount earned after tax over the last twelve months. That means that for every €1 worth of shareholders' equity, the company generated €0.12 in profit.

View our latest analysis for Elvalhalcor Hellenic Copper and Aluminium Industry

Why Is ROE Important For Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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.

Elvalhalcor Hellenic Copper and Aluminium Industry's Earnings Growth And 12% ROE

At first glance, Elvalhalcor Hellenic Copper and Aluminium Industry seems to have a decent ROE. Especially when compared to the industry average of 8.3% the company's ROE looks pretty impressive. Probably as a result of this, Elvalhalcor Hellenic Copper and Aluminium Industry was able to see a decent growth of 5.3% over the last five years.

We then compared Elvalhalcor Hellenic Copper and Aluminium Industry's net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 3.7% in the same 5-year period.

Earnings growth is an important metric to consider when valuing a stock. 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. If you're wondering about Elvalhalcor Hellenic Copper and Aluminium Industry's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Elvalhalcor Hellenic Copper and Aluminium Industry Making Efficient Use Of Its Profits?

Elvalhalcor Hellenic Copper and Aluminium Industry has a three-year median payout ratio of 30%, which implies that it retains the remaining 70% of its profits. This suggests that its dividend is well covered, and given the decent growth seen by the company, it looks like management is reinvesting its earnings efficiently.

Moreover, Elvalhalcor Hellenic Copper and Aluminium Industry is determined to keep sharing its profits with shareholders which we infer from its long history of seven years of paying a dividend.

Summary

In total, we are pretty happy with Elvalhalcor Hellenic Copper and Aluminium Industry's performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. If the company continues to grow its earnings the way it has, that could have a positive impact on its share price given how earnings per share influence long-term share prices. Not to forget, share price outcomes are also dependent on the potential risks a company may face. So it is important for investors to be aware of the risks involved in the business. You can see the 2 risks we have identified for Elvalhalcor Hellenic Copper and Aluminium Industry by visiting our risks dashboard for free on our platform here.

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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.