5 NZX Stocks with High ROE

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5 NZX Stocks with High ROE

 5 NZX Stocks with High ROE

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Summary

  • ROE is a measure of company’s profitability against the profit that it has kept for the business.
  • ROE gives investors a notion of how effectively their money is being used.
  • These 5 NZX stocks have high ROE.

Return on equity is one of the popular gauges of profitability and is defined by dividing the annual earnings of the firm by shareholders’ equity. It is a measure of a company’s performance in a given period and gives investors an idea of how effectively their money is being used.

 

                                                            

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ROE is taken as a significant parameter to look at the quality of business and a consistent strong ROE implies that the company can deliver high returns on capital over a long period of time.

Let’s have a look at 5 NZX stocks with ROE of above 25%.

1.   A2 Milk Company Limited (NZX:ATM)

A2 Milk Company posted a revenue of $677.4 million and EBITDA of $178.5 million in 1H FY21, down 16% and 32.2% from pcp, respectively, due to COVID-19-induced impact on the daigou and cross-border e-commerce. However, the Company performed strongly in China label infant nutrition with a 45.2% increase in revenue.

The Group also performed strongly in liquid milk in Australia and changed its execution approach in the US, which benefitted ATM.

ATM expects $1.4 billion in the Group revenue and the Group EBITDA margin of 24% to 26% for FY21.

ATM’s ROE is over 40% as of 26 March 2021. On 26 March, ATM ended the trading session at $8.75, down 1.35%, from its previous close.

2.   Pushpay Holdings Limited (NZX:PPH, ASX:PPH)

The performance of Pushpay Holdings exceeded expectations for the month ended December 2020.

Pushpay recently welcomed Sixth Street as a new cornerstone investor in the Company. It will hold the largest shares (17.8%) in the group after the completion of acquisition on 30 March 2021.

Sixth Street is a highly experienced technology and growth investor with primary focus on the convergence of software and payments.

PPH expects EBITDAF of between US$56 million and US$60 million for FY21 ending 31 March 2021.

PPH’s ROE is over 34% as of 26 March 2021. On 26 March, PPH ended the trading session at $1.96, down 1.01% from its previous close.

3.   Fisher & Paykel Healthcare Corporation Limited (NZX:FPHASX:FPH)

For 9 months ended December 31, 2020, Fisher's operating income grew by 73%. Due to higher hospitalisation rates during COVID-19, hospital hardware and consumables revenues kept growing.

Due to COVID-19-induced ambiguity, the Group did not have any advice for FY21. For the fiscal year 2021, FPH expects sales and net profit after tax to be better than previously forecasted.

FPH’s ROE is over 30% as of 26 March 2021. On 26 March, FPH ended the trading session at $32.5, up 0.62% from its previous close.

4.   Spark New Zealand Limited (NZX:SPKASX:SPK)

The business was essentially resistant to COVID-19's effects. Despite a 1.5% decline in sales in H1 of FY21, Spark's underlying output remained solid.

It reported an interim dividend of 12.5 cents per share for FY21, which will be issued on April 9, 2021. Spark's full-year dividend guidance remains at 25cps, which is at the high end of the spectrum.

The EBITDAI impact for FY21 is now forecast to be $50 million, down from $75 million previously.

SPK’s ROE is over 28% as of 26 March 2021. On 26 March, SPK ended the trading session at $4.4, down 0.23% from its previous close.

5.    Summerset Group Holdings Limited (NZX:SUM)

The performance of Summerset Holdings looked good in 2020, retaining high profitability and stability.

The business revealed on Wednesday that it had acquired a third property in Victoria for the development of a retirement village. Summerset plans to open the main buildings in its retirement villages in Richmond and Avonhead in 2021.

SUM’s ROE is over 18% as of 26 March 2021. On 26 March, SUM ended the trading session at $5.78, down 0.34% from its previous close.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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