Here Group (NASDAQ:HERE) has had a rough three months with its share price down 43%. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. In this article, we decided to focus on Here Group’s ROE.
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.
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for Here Group is:
23% = CN¥250m ÷ CN¥1.1b (Based on the trailing twelve months to September 2025).
The ‘return’ is the amount earned after tax over the last twelve months. That means that for every $1 worth of shareholders’ equity, the company generated $0.23 in profit.
View our latest analysis for Here Group
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 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.
At first glance, Here Group seems to have a decent ROE. Further, the company’s ROE compares quite favorably to the industry average of 17%. Probably as a result of this, Here Group was able to see an impressive net income growth of 82% over the last five years. However, there could also be other causes behind this growth. Such as – high earnings retention or an efficient management in place.
We then compared Here Group’s net income growth with the industry and we’re pleased to see that the company’s growth figure is higher when compared with the industry which has a growth rate of 25% in the same 5-year period.
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). This then helps them determine if the stock is placed for a bright or bleak future. If you’re wondering about Here Group’s’s valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.