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Is Daiei Kankyo Co., Ltd.'s (TSE:9336) Recent Stock Performance Tethered To Its Strong Fundamentals?

Simply Wall St · 1d ago

Daiei Kankyo's (TSE:9336) stock is up by a considerable 13% over the past month. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. Particularly, we will be paying attention to Daiei Kankyo's ROE today.

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.

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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 Daiei Kankyo is:

14% = JP¥14b ÷ JP¥99b (Based on the trailing twelve months to September 2025).

The 'return' is the yearly profit. One way to conceptualize this is that for each ¥1 of shareholders' capital it has, the company made ¥0.14 in profit.

View our latest analysis for Daiei Kankyo

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 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.

Daiei Kankyo's Earnings Growth And 14% ROE

At first glance, Daiei Kankyo seems to have a decent ROE. On comparing with the average industry ROE of 8.6% the company's ROE looks pretty remarkable. This probably laid the ground for Daiei Kankyo's moderate 11% net income growth seen over the past five years.

We then performed a comparison between Daiei Kankyo's net income growth with the industry, which revealed that the company's growth is similar to the average industry growth of 11% in the same 5-year period.

past-earnings-growth
TSE:9336 Past Earnings Growth December 8th 2025

Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. This then helps them determine if the stock is placed for a bright or bleak future. Is Daiei Kankyo fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Daiei Kankyo Efficiently Re-investing Its Profits?

Daiei Kankyo has a healthy combination of a moderate three-year median payout ratio of 31% (or a retention ratio of 69%) and a respectable amount of growth in earnings as we saw above, meaning that the company has been making efficient use of its profits.

Besides, Daiei Kankyo has been paying dividends over a period of three years. This shows that the company is committed to sharing profits with its shareholders.

Summary

Overall, we are quite pleased with Daiei Kankyo's performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. On studying current analyst estimates, we found that analysts expect the company to continue its recent growth streak. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.