{"id":23366,"date":"2025-12-27T08:35:43","date_gmt":"2025-12-27T00:35:43","guid":{"rendered":"https:\/\/sgbuzz.com\/?p=23366"},"modified":"2025-12-27T08:35:43","modified_gmt":"2025-12-27T00:35:43","slug":"is-the-market-following-strong-financials","status":"publish","type":"post","link":"https:\/\/sgbuzz.com\/?p=23366","title":{"rendered":"Is the Market Following Strong Financials?"},"content":{"rendered":"


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Most readers would already know that Singapore Airlines’ (SGX:C6L) stock increased by 1.4% over the past week. Given its impressive performance, we decided to study the company’s key financial indicators as a company’s long-term fundamentals usually dictate market outcomes. Particularly, we will be paying attention to Singapore Airlines’ <\/a> ROE today.<\/p>\n

Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors\u2019 money. Simply put, it is used to assess the profitability of a company in relation to its equity capital.<\/p>\n

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.<\/a><\/p>\n

The formula for ROE<\/strong> is:<\/p>\n

Return on Equity = Net Profit (from continuing operations) \u00f7 Shareholders’ Equity<\/p>\n

So, based on the above formula, the ROE for Singapore Airlines is:<\/p>\n

15% = S$2.3b \u00f7 S$16b (Based on the trailing twelve months to September 2025).<\/p>\n

The ‘return’ is the profit over the last twelve months. So, this means that for every SGD1 of its shareholder’s investments, the company generates a profit of SGD0.15.<\/p>\n

View our latest analysis for Singapore Airlines <\/a><\/span><\/p>\n

We have already established that ROE serves as an efficient profit-generating gauge for a company’s future earnings. Depending on how much of these profits the company reinvests or “retains”, and how effectively it does so, we are then able to assess a company\u2019s earnings growth potential. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don’t have the same features.<\/p>\n

At first glance, Singapore Airlines seems to have a decent ROE. Further, the company’s ROE is similar to the industry average of 17%. Consequently, this likely laid the ground for the impressive net income growth of 64% seen over the past five years by Singapore Airlines. We believe that there might also be other aspects that are positively influencing the company’s earnings growth. Such as – high earnings retention or an efficient management in place.<\/p>\n

We then compared Singapore Airlines’ 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 52% in the same 5-year period.<\/p>\n<\/p><\/div>\n