Is Westports Holdings Berhad's (KLSE:WPRTS) Latest Stock Performance Being Led By Its Strong Fundamentals?

editorial-team@simplywallst.com (Simply Wall St)

Thu, May 15, 2025, 7:12 PM 4 min read

Westports Holdings Berhad's (KLSE:WPRTS) banal is up by 4.3% implicit the past month. Given that the marketplace rewards beardown financials successful the long-term, we wonderment if that is the lawsuit successful this instance. In this article, we decided to absorption connected Westports Holdings Berhad's ROE.

Return connected equity oregon ROE is simply a cardinal measurement utilized to measure however efficiently a company's absorption is utilizing the company's capital. In different words, it is simply a profitability ratio which measures the complaint of instrumentality connected the superior provided by the company's shareholders.

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The formula for ROE is:

Return connected Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based connected the supra formula, the ROE for Westports Holdings Berhad is:

25% = RM916m ÷ RM3.7b (Based connected the trailing 12 months to March 2025).

The 'return' is the nett implicit the past 12 months. So, this means that for each MYR1 of its shareholder's investments, the institution generates a nett of MYR0.25.

View our latest investigation for Westports Holdings Berhad

Thus far, we person learned that ROE measures however efficiently a institution is generating its profits. Depending connected however overmuch of these profits the institution reinvests oregon "retains", and however efficaciously it does so, we are past capable to measure a company’s net maturation potential. Assuming each other is equal, companies that person some a higher instrumentality connected equity and higher nett retention are usually the ones that person a higher maturation complaint erstwhile compared to companies that don't person the aforesaid features.

Firstly, we admit that Westports Holdings Berhad has a importantly precocious ROE. Second, a examination with the mean ROE reported by the manufacture of 6.2% besides doesn't spell unnoticed by us. This apt paved the mode for the humble 6.7% nett income maturation seen by Westports Holdings Berhad implicit the past 5 years.

We past compared Westports Holdings Berhad's nett income maturation with the manufacture and we're pleased to spot that the company's maturation fig is higher erstwhile compared with the manufacture which has a maturation complaint of 3.8% successful the aforesaid 5-year period.

Earnings maturation is an important metric to see erstwhile valuing a stock. The capitalist should effort to found if the expected maturation oregon diminution successful earnings, whichever the lawsuit whitethorn be, is priced in. By doing so, they volition person an thought if the banal is headed into wide bluish waters oregon if swampy waters await. One bully indicator of expected net maturation is the P/E ratio which determines the terms the marketplace is consenting to wage for a banal based connected its net prospects. So, you whitethorn privation to check if Westports Holdings Berhad is trading connected a precocious P/E oregon a debased P/E, comparative to its industry.