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Has Clientèle Limited's (JSE:CLI) Impressive Stock Performance Got Anything to Do With Its Fundamentals?

Simply Wall St · 3d ago

Clientèle's (JSE:CLI) stock is up by a considerable 23% over the past month. 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. Particularly, we will be paying attention to Clientèle'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. 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 ROE is:

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

So, based on the above formula, the ROE for Clientèle is:

18% = R1.1b ÷ R5.9b (Based on the trailing twelve months to June 2025).

The 'return' is the amount earned after tax over the last twelve months. Another way to think of that is that for every ZAR1 worth of equity, the company was able to earn ZAR0.18 in profit.

View our latest analysis for Clientèle

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. 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.

Clientèle's Earnings Growth And 18% ROE

To start with, Clientèle's ROE looks acceptable. Further, the company's ROE is similar to the industry average of 19%. Consequently, this likely laid the ground for the decent growth of 18% seen over the past five years by Clientèle.

As a next step, we compared Clientèle'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 33% in the same period.

past-earnings-growth
JSE:CLI Past Earnings Growth January 7th 2026

Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. Is Clientèle fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Clientèle Efficiently Re-investing Its Profits?

While Clientèle has a three-year median payout ratio of 96% (which means it retains 4.3% of profits), the company has still seen a fair bit of earnings growth in the past, meaning that its high payout ratio hasn't hampered its ability to grow.

Additionally, Clientèle has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders.

Conclusion

In total, it does look like Clientèle has some positive aspects to its business. The company has grown its earnings moderately as a result of its impressive ROE. Yet, the business is retaining hardly any of its profits. This might have negative implications on the company's future growth. Up till now, we've only made a short study of the company's growth data. So it may be worth checking this free detailed graph of Clientèle's past earnings, as well as revenue and cash flows to get a deeper insight into the company's performance.