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Why ROE is more important than EPS (为什么股东回酬率会比每股净利来得重要?)

In order to know which is more superior that another, we should first understand what are Return of Equity (ROE) and Earnings per Share (EPS). Although the writer had explained before, but let’s get a quick recap on what are these values mean. For readers that would like to know more, the writer will post these two links to the articles at the bottom section.

In order to calculate EPS, we must first know the company’s net profit. Net profit can be retrieved by taking its gross profit, deduct all the expenses and costs, where all these values are usually can be taken in quarter reports or annual reports. Then, the net profit will be taken and divided by the total number of shares, which will equal to EPS. On the other hand, ROE is quite similar as it also requires the value of net profit. However, the net profit will not be divided by number of shares, but the shareholder’s equity, which can be found in the balance sheet.

Now back to the question, why ROE shall be prioritized over EPS, or why is ROE more important? This is because EPS tells absolutely nothing about the business itself, but all of its value is only per share basis. On the other hand, ROE is able to show how good is the business’ profitability, and how much is this current business able to generate income in terms of the shareholder’s investment.

Furthermore, a company with high ROE shows that the company has great market domination and pricing power, as they could increase the selling price and the market will still gladly accept, making their return much higher. On the other hand, a positive EPS can only show that the company is earning money but not losing money. However, it does not quite matter whether their EPS is high or low because a company can have very high EPS just because their number of shares is lesser. Hence, ROE is a comparable value with its peer companies because it is calculated in terms of percentage, whereas EPS is not comparable because each company has different number of shares.

However, there is also something to beware when looking at these two values, which is the corporate exercises. If a company has recently complete its corporate exercises such as private placement, bonus issue or right issues, both of their number of shares and shareholders’ equities will be increased, hence bringing their EPS and ROE down. On the contrary, if the company has recently conducted share buy-back, their ROE and EPS will be increased, as lesser number of shares are publicly listed, and ROE does not include any treasury shares.

In short, ROE is not only able to tell a company’s profitability but also financing decision, whether the company is generating a decent return for shareholder or not. On the other hand, EPS technically can only show whether the company is earning or losing money, and to allow investors to calculate their PE ratio, whether they are undervalued or overvalued. Hence, ROE shall be prioritized over EPS when assessing a company.

如果我们要知道哪一个指标会更好,我们首先要知道什么是股东回酬率和每股净利。即使笔者在之前已经在之前解释过这两个指标,不过我们还是来复习一下这两个数值。有兴趣的读者,笔者会在文章下方放链接。

如果要算出每股净利,我们首先要知道公司的净利。公司的净利可以从税前盈利减去所有的费用,而这些数值是可以从公司的季报和年报中拿到。然后,我们会拿这个净利除去公司的总股数,就会拿到每股净利。另一方面,股东回酬率也是挺相似的。但是,股东回酬率除的不是公司的总股数,而是除去可以在资产债务表里面找到的股东权益。

回到我们的问题,为什么我们更应该注重股东回酬率,又为什么股东回酬率更重要呢?这是因为每股净利其实根本没有告诉我们关于公司生意的任何资讯,而它的数值也单纯的只是以每股来计算而已。相对的,股东回酬率能够告诉我们公司的生意是否能够真的能帮公司赚钱,然后在股东的投资下,又能够赚到多少回酬给股东们。

除此之外,一家高股东回酬率的公司能够证明公司可以支配市场也有权利把销售价格提高,而其他买家也不会因为价格提高而有异议。另一方面,正数的每股净利只能够显示公司在赚钱,而不是在亏钱,但这并不代表什么因为每股净利的高低是被总股数影响的,所以公司在总股数少的情况下,每股净利会很高。因此,股东回酬率是可以拿来和同行做比较的,因为它是以巴仙率来计算,而每股净利却不能,因为每家公司的总股数都会有所不同。

但是,我们在看这两个数值时也要留意公司的举动。如果该公司在最近刚完成分发附加股,给红股或者私下配股,那么它们的总股数和股东权益便会增加,从而拉低它们的股东回酬率和每股净利。相对的,如果公司刚刚做了股票回购,那么每股净利和股东回酬率便会增加,因为总股数减少了,而且股东回酬率是不包括库存股的。

总结,股东回酬率不但能够让投资者知道公司的赚益,也能知道他们在生意上所作的决定是否正确,而让股东获得更高的回酬。另一方面,每股净利基本上只能告诉股东们公司是在赚钱还是亏钱,还有让投资者算出他们现在的本益比,来决定他们现在是被高估还是低估而已。因此,股东回酬率在评估一家公司时,会比每股净利来得重要。

PE ratio post:

https://www.facebook.com/InvestingKnowEverything/posts/110796750820365?__cft__[0]=AZX7UkQGqctcTsdgU6SW3Z39XE1y2wvjZmhR7KACqnVXJGV3yxan96EPiHPQ-PiNVhDndCc6QxzoRTPreb-TjHsNXLhBrBSdB3uAjFPH79Qs9ftCZh9k_2PU3Rq3EKhHY-VpeQ3k0kj94sxGUJD8qjluupppkFhwDim0NTHUU2qRFw&__tn__=-UK-R

ROE vs ROIC post:

https://www.facebook.com/InvestingKnowEverything/posts/115155867051120?__cft__[0]=AZX7UkQGqctcTsdgU6SW3Z39XE1y2wvjZmhR7KACqnVXJGV3yxan96EPiHPQ-PiNVhDndCc6QxzoRTPreb-TjHsNXLhBrBSdB3uAjFPH79Qs9ftCZh9k_2PU3Rq3EKhHY-VpeQ3k0kj94sxGUJD8qjluupppkFhwDim0NTHUU2qRFw&__tn__=-UK-R

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https://klse.i3investor.com/blogs/InvestingKnowEverything/2020-12-10-story-h1537502806.jsp

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