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Do Its Financials Have Any Role To Play In Driving Gulf Pharmaceutical Industries P.S.C.'s (ADX:JULPHAR) Stock Up Recently?

Simply Wall St · 2d ago

Most readers would already be aware that Gulf Pharmaceutical Industries P.S.C's (ADX:JULPHAR) stock increased significantly by 27% over the past week. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to study its financial indicators more closely to see if they had a hand to play in the recent price move. Specifically, we decided to study Gulf Pharmaceutical Industries P.S.C'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. Put another way, it reveals the company's success at turning shareholder investments into profits.

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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 Gulf Pharmaceutical Industries P.S.C is:

6.5% = د.إ63m ÷ د.إ975m (Based on the trailing twelve months to September 2025).

The 'return' is the yearly profit. One way to conceptualize this is that for each AED1 of shareholders' capital it has, the company made AED0.06 in profit.

Check out our latest analysis for Gulf Pharmaceutical Industries P.S.C

What Has ROE Got To Do With Earnings Growth?

So far, we've learned that ROE is a measure of a company's profitability. 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. 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.

A Side By Side comparison of Gulf Pharmaceutical Industries P.S.C's Earnings Growth And 6.5% ROE

It is hard to argue that Gulf Pharmaceutical Industries P.S.C's ROE is much good in and of itself. Even when compared to the industry average of 8.7%, the ROE figure is pretty disappointing. Despite this, surprisingly, Gulf Pharmaceutical Industries P.S.C saw an exceptional 49% net income growth over the past five years. We believe that there might be other aspects that are positively influencing the company's earnings growth. Such as - high earnings retention or an efficient management in place.

Next, on comparing with the industry net income growth, we found that Gulf Pharmaceutical Industries P.S.C's growth is quite high when compared to the industry average growth of 8.3% in the same period, which is great to see.

past-earnings-growth
ADX:JULPHAR Past Earnings Growth December 8th 2025

Earnings growth is an important metric to consider when valuing a stock. 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. Is Gulf Pharmaceutical Industries P.S.C fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Gulf Pharmaceutical Industries P.S.C Making Efficient Use Of Its Profits?

Given that Gulf Pharmaceutical Industries P.S.C doesn't pay any regular dividends to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.

Conclusion

On the whole, we do feel that Gulf Pharmaceutical Industries P.S.C has some positive attributes. Despite its low rate of return, the fact that the company reinvests a very high portion of its profits into its business, no doubt contributed to its high earnings growth. With that said, on studying the latest analyst forecasts, we found that while the company has seen growth in its past earnings, analysts expect its future earnings to shrink. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.