LIMES Schlosskliniken AG (ETR:LIK) Stock Has Shown Weakness Lately But Financials Look Strong: Should Prospective Shareholders Make The Leap?

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

Thu, May 15, 2025, 9:14 PM 3 min read

It is hard to get excited aft looking astatine LIMES Schlosskliniken's (ETR:LIK) caller performance, erstwhile its banal has declined 19% implicit the past 3 months. However, a person look astatine its dependable financials mightiness origin you to deliberation again. Given that fundamentals usually thrust semipermanent marketplace outcomes, the institution is worthy looking at. In this article, we decided to absorption connected LIMES Schlosskliniken'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. Put different way, it reveals the company's occurrence astatine turning shareholder investments into profits.

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The formula for instrumentality connected equity is:

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

So, based connected the supra formula, the ROE for LIMES Schlosskliniken is:

16% = €3.2m ÷ €20m (Based connected the trailing 12 months to December 2024).

The 'return' refers to a company's net implicit the past year. One mode to conceptualize this is that for each €1 of shareholders' superior it has, the institution made €0.16 successful profit.

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Thus far, we person learned that ROE measures however efficiently a institution is generating its profits. We present request to measure however overmuch nett the institution reinvests oregon "retains" for aboriginal maturation which past gives america an thought astir the maturation imaginable of the company. Assuming everything other remains unchanged, the higher the ROE and nett retention, the higher the maturation complaint of a institution compared to companies that don't needfully carnivore these characteristics.

To commencement with, LIMES Schlosskliniken's ROE looks acceptable. On comparing with the mean manufacture ROE of 5.2% the company's ROE looks beauteous remarkable. This astir apt laid the crushed for LIMES Schlosskliniken's important 38% nett income maturation seen implicit the past 5 years. However, determination could besides beryllium different causes down this growth. Such arsenic - precocious net retention oregon an businesslike absorption successful place.

Next, connected comparing with the manufacture nett income growth, we recovered that LIMES Schlosskliniken's maturation is rather precocious erstwhile compared to the manufacture mean maturation of 17% successful the aforesaid period, which is large to see.

The ground for attaching worth to a institution is, to a large extent, tied to its net growth. It’s important for an capitalist to cognize whether the marketplace has priced successful the company's expected net maturation (or decline). Doing truthful volition assistance them found if the stock's aboriginal looks promising oregon ominous. If you're wondering astir LIMES Schlosskliniken's's valuation, cheque retired this gauge of its price-to-earnings ratio, arsenic compared to its industry.