Is Hyundai Elevator Co., Ltd's (KRX:017800) Recent Stock Performance Influenced By Its Fundamentals In Any Way?

Hyundai Elevator's (KRX:017800) stock is up by a considerable 6.5% over the past week. We wonder if and what role the company's financials play in that price change as a company's long-term fundamentals usually dictate market outcomes. Particularly, we will be paying attention to Hyundai Elevator's ROE today.

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 simpler terms, it measures the profitability of a company in relation to shareholder's equity.

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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 Hyundai Elevator is:

20% = ₩249b ÷ ₩1.3t (Based on the trailing twelve months to June 2025).

The 'return' is the income the business earned over the last year. So, this means that for every ₩1 of its shareholder's investments, the company generates a profit of ₩0.20.

Check out our latest analysis for Hyundai Elevator

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. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. 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.

Hyundai Elevator's Earnings Growth And 20% ROE

At first glance, Hyundai Elevator seems to have a decent ROE. Further, the company's ROE compares quite favorably to the industry average of 5.9%. Probably as a result of this, Hyundai Elevator was able to see a decent growth of 17% over the last five years.

As a next step, we compared Hyundai Elevator's 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 19% in the same period.

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. 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. Is Hyundai Elevator fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Hyundai Elevator Efficiently Re-investing Its Profits?

The high three-year median payout ratio of 97% (or a retention ratio of 2.8%) for Hyundai Elevator suggests that the company's growth wasn't really hampered despite it returning most of its income to its shareholders.

Moreover, Hyundai Elevator is determined to keep sharing its profits with shareholders which we infer from its long history of six years of paying a dividend. Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to drop to 57% over the next three years. As a result, the expected drop in Hyundai Elevator's payout ratio explains the anticipated rise in the company's future ROE to 24%, over the same period.

Summary

In total, it does look like Hyundai Elevator has some positive aspects to its business. Specifically, its high ROE which likely led to the growth in earnings. Bear in mind, the company reinvests little to none of its profits, which means that investors aren't necessarily reaping the full benefits of the high rate of return. The latest industry analyst forecasts show that the company is expected to maintain its current growth rate. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.

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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.