Are Österreichische Post AG's (VIE:POST) Mixed Financials The Reason For Its Gloomy Performance on The Stock Market?

Simply Wall St · 07/02 04:18

It is hard to get excited after looking at Österreichische Post's (VIE:POST) recent performance, when its stock has declined 3.5% over the past three months. It is possible that the markets have ignored the company's differing financials and decided to lean-in to the negative sentiment. Fundamentals usually dictate market outcomes so it makes sense to study the company's financials. Specifically, we decided to study Österreichische Post's ROE in this article.

Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

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How To Calculate Return On Equity?

The formula for ROE is:

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

So, based on the above formula, the ROE for Österreichische Post is:

19% = €144m ÷ €762m (Based on the trailing twelve months to March 2025).

The 'return' is the income the business earned over the last year. Another way to think of that is that for every €1 worth of equity, the company was able to earn €0.19 in profit.

View our latest analysis for Österreichische Post

What Is The Relationship Between ROE And Earnings Growth?

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. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.

Österreichische Post's Earnings Growth And 19% ROE

To begin with, Österreichische Post seems to have a respectable ROE. On comparing with the average industry ROE of 15% the company's ROE looks pretty remarkable. However, we are curious as to how the high returns still resulted in flat growth for Österreichische Post in the past five years. We reckon that there could be some other factors at play here that's limiting the company's growth. Such as, the company pays out a huge portion of its earnings as dividends, or is faced with competitive pressures.

We then compared Österreichische Post's net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 16% in the same 5-year period, which is a bit concerning.

past-earnings-growth
WBAG:POST Past Earnings Growth July 2nd 2025

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. If you're wondering about Österreichische Post's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Österreichische Post Efficiently Re-investing Its Profits?

With a high three-year median payout ratio of 91% (implying that the company keeps only 8.8% of its income) of its business to reinvest into its business), most of Österreichische Post's profits are being paid to shareholders, which explains the absence of growth in earnings.

Additionally, Österreichische Post has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 90%. Accordingly, forecasts suggest that Österreichische Post's future ROE will be 20% which is again, similar to the current ROE.

Summary

On the whole, we feel that the performance shown by Österreichische Post can be open to many interpretations. While the company does have a high rate of return, its low earnings retention is probably what's hampering its earnings growth. With that said, the latest industry analyst forecasts reveal that the company's earnings are expected to accelerate. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.