Is Grupo Aeroportuario del Sureste, S. A. B. de C. V.'s (BMV:ASURB) Latest Stock Performance A Reflection Of Its Financial Health?

Most readers would already be aware that Grupo Aeroportuario del Sureste S. A. B. de C. V's (BMV:ASURB) stock increased significantly by 13% over the past month. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. In this article, we decided to focus on Grupo Aeroportuario del Sureste S. A. B. de C. V's ROE.

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 other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.

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How To 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 Grupo Aeroportuario del Sureste S. A. B. de C. V is:

22% = Mex$14b ÷ Mex$65b (Based on the trailing twelve months to March 2025).

The 'return' is the yearly profit. Another way to think of that is that for every MX$1 worth of equity, the company was able to earn MX$0.22 in profit.

View our latest analysis for Grupo Aeroportuario del Sureste S. A. B. de C. V

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. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.

Grupo Aeroportuario del Sureste S. A. B. de C. V's Earnings Growth And 22% ROE

At first glance, Grupo Aeroportuario del Sureste S. A. B. de C. V seems to have a decent ROE. On comparing with the average industry ROE of 18% the company's ROE looks pretty remarkable. Probably as a result of this, Grupo Aeroportuario del Sureste S. A. B. de C. V was able to see an impressive net income growth of 30% over the last five years. We believe that there might also be other aspects that are positively influencing the company's earnings 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 Grupo Aeroportuario del Sureste S. A. B. de C. V'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 21% in the same 5-year 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. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. 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 Grupo Aeroportuario del Sureste S. A. B. de C. V is trading on a high P/E or a low P/E, relative to its industry.

Is Grupo Aeroportuario del Sureste S. A. B. de C. V Efficiently Re-investing Its Profits?

The three-year median payout ratio for Grupo Aeroportuario del Sureste S. A. B. de C. V is 30%, which is moderately low. The company is retaining the remaining 70%. This suggests that its dividend is well covered, and given the high growth we discussed above, it looks like Grupo Aeroportuario del Sureste S. A. B. de C. V is reinvesting its earnings efficiently.

Moreover, Grupo Aeroportuario del Sureste S. A. B. de C. V is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. Our latest analyst data shows that the future payout ratio of the company is expected to rise to 70% over the next three years. Despite the higher expected payout ratio, the company's ROE is not expected to change by much.

Conclusion

On the whole, we feel that Grupo Aeroportuario del Sureste S. A. B. de C. V's performance has been quite good. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts 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.