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Can Mixed Fundamentals Have A Negative Impact on Brodogradiliste Viktor Lenac d.d. (ZGSE:VLEN) Current Share Price Momentum?

Simply Wall St · 09/04 04:25

Most readers would already be aware that Brodogradiliste Viktor Lenac d.d's (ZGSE:VLEN) stock increased significantly by 14% over the past week. However, we decided to pay attention to the company's fundamentals which don't appear to give a clear sign about the company's financial health. In this article, we decided to focus on Brodogradiliste Viktor Lenac d.d's ROE.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Simply put, it is used to assess the profitability of a company in relation to its equity capital.

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How To Calculate Return On Equity?

The formula for return on equity is:

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

So, based on the above formula, the ROE for Brodogradiliste Viktor Lenac d.d is:

5.9% = €3.5m ÷ €59m (Based on the trailing twelve months to June 2025).

The 'return' refers to a company's earnings over the last year. One way to conceptualize this is that for each €1 of shareholders' capital it has, the company made €0.06 in profit.

Check out our latest analysis for Brodogradiliste Viktor Lenac d.d

Why Is ROE Important For Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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’s 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.

Brodogradiliste Viktor Lenac d.d's Earnings Growth And 5.9% ROE

On the face of it, Brodogradiliste Viktor Lenac d.d's ROE is not much to talk about. Next, when compared to the average industry ROE of 10%, the company's ROE leaves us feeling even less enthusiastic. As a result, Brodogradiliste Viktor Lenac d.d's flat net income growth over the past five years doesn't come as a surprise given its lower ROE.

We then compared Brodogradiliste Viktor Lenac d.d's net income growth with the industry and found that the average industry growth rate was 13% in the same 5-year period.

past-earnings-growth
ZGSE:VLEN Past Earnings Growth September 4th 2025

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. 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. If you're wondering about Brodogradiliste Viktor Lenac d.d's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Brodogradiliste Viktor Lenac d.d Efficiently Re-investing Its Profits?

While the company did pay out a portion of its dividend in the past, it currently doesn't pay a regular dividend. We infer that the company has been reinvesting all of its profits to grow its business.

Conclusion

Overall, we have mixed feelings about Brodogradiliste Viktor Lenac d.d. While the company does have a high rate of profit retention, its low rate of return is probably hampering its earnings growth. Until now, we have only just grazed the surface of the company's past performance by looking at the company's fundamentals. So it may be worth checking this free detailed graph of Brodogradiliste Viktor Lenac d.d's past earnings, as well as revenue and cash flows to get a deeper insight into the company's performance.