Stock Analysis

Grupo Comercial Chedraui, S.A.B. de C.V.'s (BMV:CHDRAUIB) Stock On An Uptrend: Could Fundamentals Be Driving The Momentum?

BMV:CHDRAUI B
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Grupo Comercial Chedraui. de (BMV:CHDRAUIB) has had a great run on the share market with its stock up by a significant 21% over the last three months. 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. Particularly, we will be paying attention to Grupo Comercial Chedraui. de's ROE today.

Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. 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 Grupo Comercial Chedraui. de is:

13% = Mex$6.4b ÷ Mex$51b (Based on the trailing twelve months to March 2025).

The 'return' is the yearly profit. That means that for every MX$1 worth of shareholders' equity, the company generated MX$0.13 in profit.

View our latest analysis for Grupo Comercial Chedraui. de

What Is The Relationship Between ROE And Earnings Growth?

So far, we've learned that ROE is a measure of a company's profitability. 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. 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.

Grupo Comercial Chedraui. de's Earnings Growth And 13% ROE

When you first look at it, Grupo Comercial Chedraui. de's ROE doesn't look that attractive. Yet, a closer study shows that the company's ROE is similar to the industry average of 16%. Particularly, the exceptional 27% net income growth seen by Grupo Comercial Chedraui. de over the past five years is pretty remarkable. Considering the moderately low ROE, it is quite possible that there might be some other aspects that are positively influencing the company's earnings growth. Such as - high earnings retention or an efficient management in place.

As a next step, we compared Grupo Comercial Chedraui. de's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 18%.

past-earnings-growth
BMV:CHDRAUI B Past Earnings Growth July 11th 2025

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. Has the market priced in the future outlook for CHDRAUI B? You can find out in our latest intrinsic value infographic research report.

Is Grupo Comercial Chedraui. de Using Its Retained Earnings Effectively?

Grupo Comercial Chedraui. de has a really low three-year median payout ratio of 14%, meaning that it has the remaining 86% left over to reinvest into its business. So it seems like the management is reinvesting profits heavily to grow its business and this reflects in its earnings growth number.

Besides, Grupo Comercial Chedraui. de has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Our latest analyst data shows that the future payout ratio of the company is expected to rise to 24% over the next three years. Still, forecasts suggest that Grupo Comercial Chedraui. de's future ROE will rise to 17% even though the the company's payout ratio is expected to rise. We presume that there could some other characteristics of the business that could be driving the anticipated growth in the company's ROE.

Conclusion

In total, it does look like Grupo Comercial Chedraui. de 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. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.

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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.