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We Win (NSE:WEWIN) has had a great run on the share market with its stock up by a significant 14% over the last week. But the company's key financial indicators appear to be differing across the board and that makes us question whether or not the company's current share price momentum can be maintained. In this article, we decided to focus on We Win's ROE.

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 simpler terms, it measures the profitability of a company in relation to shareholder's equity.

See our latest analysis for We Win

The formula for ROE is:

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

So, based on the above formula, the ROE for We Win is:

10% = 22m 219m (Based on the trailing twelve months to June 2022).

The 'return' is the income the business earned over the last year. That means that for every 1 worth of shareholders' equity, the company generated 0.10 in profit.

We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that dont share these attributes.

At first glance, We Win's ROE doesn't look very promising. Next, when compared to the average industry ROE of 14%, the company's ROE leaves us feeling even less enthusiastic. Therefore, it might not be wrong to say that the five year net income decline of 27% seen by We Win was probably the result of it having a lower ROE. However, there could also be other factors causing the earnings to decline. Such as - low earnings retention or poor allocation of capital.

That being said, we compared We Win's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 16% in the same period.

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. Its important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. Is We Win fairly valued compared to other companies? These 3 valuation measures might help you decide.

We Win doesn't pay any dividend, meaning that potentially all of its profits are being reinvested in the business, which doesn't explain why the company's earnings have shrunk if it is retaining all of its profits. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds.

In total, we're a bit ambivalent about We Win's performance. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. 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. To know the 3 risks we have identified for We Win visit our risks dashboard for free.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

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We Win Limited's (NSE:WEWIN) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue? - Simply Wall St

Nutanix, Inc. (NASDAQ:NTNX) shareholders will doubtless be very grateful to see the share price up 59% in the last quarter. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 47% in a year, falling short of the returns you could get by investing in an index fund.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

Though if you're not interested in researching what drove NTNX's performance, we have a free list of interesting investing ideas to potentially inspire your next investment!

Nutanix wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Nutanix grew its revenue by 13% over the last year. That's not a very high growth rate considering it doesn't make profits. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 47% in a year. It's important not to lose sight of the fact that profitless companies must grow. But if you buy a loss making company then you could become a loss making investor.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Nutanix is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Nutanix stock, you should check out this free report showing analyst consensus estimates for future profits.

We regret to report that Nutanix shareholders are down 47% for the year. Unfortunately, that's worse than the broader market decline of 16%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 1.2%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Nutanix better, we need to consider many other factors. For instance, we've identified 3 warning signs for Nutanix (1 shouldn't be ignored) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

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Nutanix (NASDAQ:NTNX) investors are sitting on a loss of 47% if they invested a year ago - Simply Wall St

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. For instance, the price of Automatic Data Processing, Inc. (NASDAQ:ADP) stock is up an impressive 129% over the last five years. Also pleasing for shareholders was the 15% gain in the last three months.

So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

Though if you're not interested in researching what drove ADP's performance, we have a free list of interesting investing ideas to potentially inspire your next investment!

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Automatic Data Processing achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is slower than the share price growth of 18% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that Automatic Data Processing has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Automatic Data Processing the TSR over the last 5 years was 154%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

We're pleased to report that Automatic Data Processing shareholders have received a total shareholder return of 24% over one year. And that does include the dividend. That's better than the annualised return of 20% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 1 warning sign for Automatic Data Processing that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

Read this article:
Automatic Data Processing's (NASDAQ:ADP) investors will be pleased with their stellar 154% return over the last five years - Simply Wall St

As well as the obvious ethical argument for easing the strain on the planet, going green has clear business benefits in terms of brand reputation, increased efficiency, reduced waste and resulting cost savings.

The technology industry is already playing a key role in supporting organisations to reduce their carbon footprint, whether enabling remote working, automating routine processes or delivering renewable energy sources.

Along with artificial intelligence (AI) and the internet of things (IoT), predictive simulation and digital twin modelling are increasingly being used by companies not just to streamline processes and improve project management but also to help them work in a more sustainable way.

As the name indicates, a digital twin is a virtual replica of existing or proposed processes, business functions, offices, manufacturing plant lines or entire factories. Using this simulation software, a company can design, visualise and experience how new equipment, ways of operating or other innovations will perform.

This modelling allows accurate assessment of such innovations impact, testing of multiple what if? scenarios and the prediction of potential problems, all in a theoretical environment before any investment, installation or construction is started in the real world.

The detailed, interactive visualisation provided by digital twins offers the scope for complex levels of testing and analysis. This provides invaluable data which can help companies make better business decisions around capital investments, resource planning and process design.

It gives unprecedented insight and clarity to inform crucial decisions which could shape the future direction of a business, enabling them to be made without affecting production or supply chain delivery while minimising the risk of costly mistakes.

In a nutshell, digital twins and predictive simulation enable organisations to test new ways of doing things in great detail but all in a risk-free, virtual world.

This software provides the opportunity for businesses to trial all manner of cutting-edge technology, including those aimed at enhancing project management, boosting efficiency and achieving their sustainability goals.

More and more companies are recognising the value of harnessing digital twin simulation to support important decisions around their design, manufacturing, business operations and customer services functions.

Last year BMW revealed its use of digital twin software to virtually build the factory of the future. The simulation incorporated all the multiple complexities of one of the automotive giants 31 car manufacturing plants.

The project involved creating a twin of every element of the complete factory model - including the buildings, equipment, robots and assembly parts - to support virtual factory planning, autonomous robots, predictive maintenance and big data analytics.

It is designed to open up even greater opportunities for faster innovation, reduced planning times, improved flexibility, greater precision and optimal efficiency.

At Lanner, we recently helped Safran Aircraft Engines direct millions of pounds worth of investment by developing a flexible model to help improve operational performance at their primary facility south of Paris. The project focused on five key areas:

We developed a simulation focusing on quality and lead time in order for Safran to develop and test scenarios in a risk-free environment. The results of which have provided an evidence base for significant investment.

As well as the automotive and manufacturing industries, an ever-growing range of sectors are using predictive digital twinning to enhance their business.

Companies ranging from global communications networks to engineering firms, international animal feed suppliers to wind turbine manufacturers have used it to design factories, optimise production, plan business growth, explore the Industrial IoT and implement smart technology.

Adopting a more sustainable approach to realising business objectives encourages a focus on maximising resources while improving long-term viability.

Greater sustainability also boosts profits, according to research by manufacturers organisation Make UK and energy company E.ON undertaken just before the pandemic. They found that 30% of manufacturers were investing in energy efficiency measures, with 40% reporting increased profits and 30% reporting increased competitiveness as a result.

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How digital twins can support better business and greater sustainability | BCS - BCS

Google has been working on making its TV experience faster, more responsive, and less of a hassle for users. According to a post on its support forums on Monday, the company has been working on improving boot time, general performance, and the number of options for managing storage on both third-party TVs as well as its Chromecast with Google TV streaming puck.

The company says that its made it so the Google TV homescreen loads faster, reducing the amount of time before you can pick out which content to watch. Google says it achieved the performance improvements through CPU optimizations and improvements to cache management and that theyve started to roll out on third-party devices and are coming soon for Chromecasts.

According to the post, users should be seeing faster performance in several areas when loading the Live tab, scrolling through the homescreen, or using a kid profile. Some of these improvements, according to the company, are thanks to the fact that Google TV itself uses less RAM, leaving more for apps, especially when youre switching between different screens.

The companys also responding to complaints that have cropped up about how storage limitations can make it difficult to install apps for Google TV, especially on devices like the Chromecast, which only really has 5GB of usable space, according to Android Police. Google says its added a menu in Settings > System > Storage thatll let you free up space by clearing the devices cache and uninstalling apps, which has rolled out to the Chromecast and will be coming soon to smart TVs. It also says theres an automated process that runs in the background to free up space for apps.

With recent reports about Google looking to integrate wearables and free channels into Google TV, it seems like the company could be getting ready to push users toward its big screen experience. If thats the plan, it makes sense that its trying to improve on the basics now. However, as people need more and more apps to keep up with the growing number of streaming services, it may be time for hardware manufacturers (including Google) to consider upgrading the amount of storage that comes with Google TV devices. While software tricks may help reduce the number of low storage error messages, theres really no substitute for just having more space.

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Google admits its Google TV software is too slow - The Verge