Is Applied Nutrition Plc’s (LON:APN) Latest Stock Performance A Reflection Of Its Financial Health?

Applied Nutrition’s (LON:APN) stock is up by a considerable 55% over the past three months. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Applied Nutrition’s ROE in this article.

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 other words, it is a profitability ratio which measures the rate of return on the capital provided by the company’s shareholders.

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

Return on equity can be calculated by using the formula:

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

So, based on the above formula, the ROE for Applied Nutrition is:

39% = UK£21m ÷ UK£54m (Based on the trailing twelve months to July 2025).

The ‘return’ is the income the business earned over the last year. Another way to think of that is that for every £1 worth of equity, the company was able to earn £0.39 in profit.

View our latest analysis for Applied Nutrition

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or “retains” for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don’t have the same features.

First thing first, we like that Applied Nutrition has an impressive ROE. Second, a comparison with the average ROE reported by the industry of 12% also doesn’t go unnoticed by us. So, the substantial 25% net income growth seen by Applied Nutrition over the past five years isn’t overly surprising.

Next, on comparing with the industry net income growth, we found that Applied Nutrition’s growth is quite high when compared to the industry average growth of 7.7% in the same period, which is great to see.

Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock’s future looks promising or ominous. Is Applied Nutrition fairly valued compared to other companies? These 3 valuation measures might help you decide.

Applied Nutrition doesn’t pay any regular dividends currently which essentially means that it has been reinvesting all of its profits into the business. This definitely contributes to the high earnings growth number that we discussed above.

Overall, we are quite pleased with Applied Nutrition’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. With that said, the latest industry analyst forecasts reveal that the company’s earnings growth is expected to slow down. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.