Do Its Financials Have Any Role To Play In Driving Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság's (BUSE:APPENINN) Stock Up Recently?

Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság's (BUSE:APPENINN) stock is up by a considerable 22% over the past month. As most would know, fundamentals are what usually guide market price movements over the long-term, so we decided to look at the company's key financial indicators today to determine if they have any role to play in the recent price movement. In this article, we decided to focus on Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság's 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. Simply put, it is used to assess the profitability of a company in relation to its equity capital.

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How Do You Calculate Return On Equity?

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 Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság is:

9.6% = €12m ÷ €124m (Based on the trailing twelve months to June 2025).

The 'return' is the yearly profit. That means that for every HUF1 worth of shareholders' equity, the company generated HUF0.10 in profit.

See our latest analysis for Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság

What Is The Relationship Between ROE And 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 all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.

A Side By Side comparison of Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság's Earnings Growth And 9.6% ROE

On the face of it, Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság's ROE is not much to talk about. However, its ROE is similar to the industry average of 11%, so we won't completely dismiss the company. Looking at Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság's exceptional 23% five-year net income growth in particular, we are definitely impressed. Given the slightly low ROE, it is likely that there could be some other aspects that are driving this growth. 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 compared Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság'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 18% in the same 5-year period.

Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság Making Efficient Use Of Its Profits?

Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság doesn't pay any regular dividends currently which essentially means that it has been reinvesting all of its profits into the business. This definitely contributes to the high earnings growth number that we discussed above.

Conclusion

In total, it does look like Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság 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. To know the 2 risks we have identified for Appeninn Vagyonkezelo Holding Nyilvánosan Muködo Részvénytársaság visit our risks dashboard for free.

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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.