MAAS Group Holdings Limited (ASX:MGH) Shares Decline Despite Solid Fundamentals: Will The Market Adjust The Share Price Ahead?

February 21, 2025 01:33 PM AEDT | By Team Kalkine Media

MAAS Group Holdings Limited (ASX:MGH) Shares Decline Despite Solid Fundamentals: Will The Market Adjust The Share Price Ahead? — Image source: Shutterstock

Return on Equity (ROE): A Measure of Profitability

ROE is an essential metric for evaluating a company's ability to generate returns from shareholders' investments. Here is a simplified version of the ROE calculation for MAAS Group Holdings:

ROE = Net Profit ÷ Shareholders' Equity

For MAAS Group Holdings, the calculation is 8.9% = AU$73 million ÷ AU$823 million, based on the trailing twelve months to December 2024.

This means that for every A$1 of equity, the company generated A$0.09 in profit.

Analyzing Growth and Profitability

Although MAAS Group Holdings' ROE of 8.9% lags behind the industry average of 16%, the company achieved a remarkable net income growth rate of 25% over the last five years. This suggests efficient management and a strategic reinvestment approach.

When comparing MAAS Group Holdings' earnings growth with its industry peers, the net income increase is consistent with the sector's average growth rate of 25% over the same timeframe.

Efficiency in Profit Utilization

With a three-year median payout ratio of 27%, MAAS Group Holdings retains about 73% of its income, indicating an efficient earnings reinvestment strategy while maintaining a dividend policy in place for four years. Analysts expect the company's payout ratio to remain steady at 25%, even as its future ROE is projected to rise to 14%.

MAAS Group Holdings appears to be on a path of sustainable growth, evidenced by its ability to grow earnings through reinvestment. While the ROE remains lower than desirable, the company's commitment to efficient profit use and strong growth rates present an optimistic outlook.

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