WEBULL

Alleima AB (publ)'s (STO:ALLEI) Financials Are Too Obscure To Link With Current Share Price Momentum: What's In Store For the Stock?

Simply Wall St · 2d ago

Most readers would already be aware that Alleima's (STO:ALLEI) stock increased significantly by 14% over the past three months. 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 Alleima'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.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

How Is ROE Calculated?

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 Alleima is:

5.9% = kr979m ÷ kr17b (Based on the trailing twelve months to September 2025).

The 'return' refers to a company's earnings over the last year. One way to conceptualize this is that for each SEK1 of shareholders' capital it has, the company made SEK0.06 in profit.

See our latest analysis for Alleima

What Is The Relationship Between ROE And Earnings Growth?

So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. 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 Alleima's Earnings Growth And 5.9% ROE

On the face of it, Alleima's ROE is not much to talk about. Next, when compared to the average industry ROE of 9.7%, the company's ROE leaves us feeling even less enthusiastic. Hence, the flat earnings seen by Alleima over the past five years could probably be the result of it having a lower ROE.

Next, on comparing with the industry net income growth, we found that Alleima's reported growth was lower than the industry growth of 8.2% over the last few years, which is not something we like to see.

past-earnings-growth
OM:ALLEI Past Earnings Growth December 20th 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). Doing so will help them establish if the stock's future looks promising or ominous. What is ALLEI worth today? The intrinsic value infographic in our free research report helps visualize whether ALLEI is currently mispriced by the market.

Is Alleima Efficiently Re-investing Its Profits?

In spite of a normal three-year median payout ratio of 37% (or a retention ratio of 63%), Alleima hasn't seen much growth in its earnings. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds.

Additionally, Alleima has paid dividends over a period of three years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 45% of its profits over the next three years. Still, forecasts suggest that Alleima's future ROE will rise to 8.8% even though the the company's payout ratio is not expected to change by much.

Conclusion

Overall, we have mixed feelings about Alleima. While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth. That being so, the latest analyst forecasts show that the company will continue to see an expansion in its earnings. 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.