Are INFOvine.co.,Ltd.'s (KOSDAQ:115310) Mixed Financials Driving The Negative Sentiment?
With its stock down 11% over the past week, it is easy to disregard INFOvine.co.Ltd (KOSDAQ:115310). It seems that the market might have completely ignored the positive aspects of the company's fundamentals and decided to weigh-in more on the negative aspects. Fundamentals usually dictate market outcomes so it makes sense to study the company's financials. Particularly, we will be paying attention to INFOvine.co.Ltd's ROE today.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.
How To Calculate Return On Equity?
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for INFOvine.co.Ltd is:
7.2% = ₩6.6b ÷ ₩93b (Based on the trailing twelve months to September 2025).
The 'return' is the yearly profit. That means that for every ₩1 worth of shareholders' equity, the company generated ₩0.07 in profit.
Check out our latest analysis for INFOvine.co.Ltd
Why Is ROE Important For Earnings Growth?
So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.
INFOvine.co.Ltd's Earnings Growth And 7.2% ROE
At first glance, INFOvine.co.Ltd's ROE doesn't look very promising. Yet, a closer study shows that the company's ROE is similar to the industry average of 7.6%. On the other hand, INFOvine.co.Ltd reported a fairly low 4.9% net income growth over the past five years. Remember, the company's ROE is not particularly great to begin with. So this could also be one of the reasons behind the company's low growth in earnings.
Next, on comparing with the industry net income growth, we found that INFOvine.co.Ltd's reported growth was lower than the industry growth of 9.5% over the last few years, which is not something we like to see.
Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. This then helps them determine if the stock is placed for a bright or bleak future. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if INFOvine.co.Ltd is trading on a high P/E or a low P/E, relative to its industry.
Is INFOvine.co.Ltd Making Efficient Use Of Its Profits?
Despite having a moderate three-year median payout ratio of 28% (implying that the company retains the remaining 72% of its income), INFOvine.co.Ltd's earnings growth was quite low. Therefore, there might be some other reasons to explain the lack in that respect. For example, the business could be in decline.
In addition, INFOvine.co.Ltd has been paying dividends over a period of six years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth.
Conclusion
On the whole, we feel that the performance shown by INFOvine.co.Ltd can be open to many interpretations. While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. Our risks dashboard will have the 1 risk we have identified for INFOvine.co.Ltd.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.