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Should Weakness in Exclusive Property REIT-Sofia's (BUL:EXPR) Stock Be Seen As A Sign That Market Will Correct The Share Price Given Decent Financials?

Simply Wall St · 4d ago

It is hard to get excited after looking at Exclusive Property REIT-Sofia's (BUL:EXPR) recent performance, when its stock has declined 49% over the past week. However, stock prices are usually driven by a company’s financials over the long term, which in this case look pretty respectable. Particularly, we will be paying attention to Exclusive Property REIT-Sofia's ROE today.

Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. 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 Exclusive Property REIT-Sofia is:

10% = лв1.9m ÷ лв18m (Based on the trailing twelve months to September 2025).

The 'return' is the yearly profit. Another way to think of that is that for every €1 worth of equity, the company was able to earn €0.10 in profit.

Check out our latest analysis for Exclusive Property REIT-Sofia

What Has ROE Got To Do With 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 Exclusive Property REIT-Sofia's Earnings Growth And 10% ROE

When you first look at it, Exclusive Property REIT-Sofia's ROE doesn't look that attractive. However, the fact that the its ROE is quite higher to the industry average of 4.3% doesn't go unnoticed by us. This probably goes some way in explaining Exclusive Property REIT-Sofia's moderate 15% growth over the past five years amongst other factors. Bear in mind, the company does have a moderately low ROE. It is just that the industry ROE is lower. Therefore, the growth in earnings could also be the result of other factors. E.g the company has a low payout ratio or could belong to a high growth industry.

As a next step, we compared Exclusive Property REIT-Sofia's net income growth with the industry and were disappointed to see that the company's growth is lower than the industry average growth of 19% in the same period.

past-earnings-growth
BUL:EXPR Past Earnings Growth January 6th 2026

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. 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. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Exclusive Property REIT-Sofia is trading on a high P/E or a low P/E, relative to its industry.

Is Exclusive Property REIT-Sofia Using Its Retained Earnings Effectively?

In Exclusive Property REIT-Sofia's case, its respectable earnings growth can probably be explained by its low three-year median payout ratio of 2.6% (or a retention ratio of 97%), which suggests that the company is investing most of its profits to grow its business.

Moreover, Exclusive Property REIT-Sofia is determined to keep sharing its profits with shareholders which we infer from its long history of five years of paying a dividend.

Summary

Overall, we feel that Exclusive Property REIT-Sofia certainly does have some positive factors to consider. Particularly, its earnings have grown respectably as we saw earlier, which was likely achieved due to the company reinvesting most of its earnings at a decent rate of return, to grow its business. While we won't completely dismiss the company, what we would do, is try to ascertain how risky the business is to make a more informed decision around the company. To know the 4 risks we have identified for Exclusive Property REIT-Sofia visit our risks dashboard for free.