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    Is KATITAS CO., Ltd.'s (TSE:8919) Latest Stock Performance Being Led By Its Strong Fundamentals?

    Simply Wall St·12/17/2025 22:47:53
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    Most readers would already know that KATITAS' (TSE:8919) stock increased by 7.3% over the past three months. Since the market usually pay for a company’s long-term financial health, we decided to study the company’s fundamentals to see if they could be influencing the market. In this article, we decided to focus on KATITAS' 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. Put another way, it reveals the company's success at turning shareholder investments into profits.

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    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 KATITAS is:

    22% = JP¥11b ÷ JP¥50b (Based on the trailing twelve months to September 2025).

    The 'return' is the yearly profit. So, this means that for every ¥1 of its shareholder's investments, the company generates a profit of ¥0.22.

    Check out our latest analysis for KATITAS

    Why Is ROE Important For Earnings Growth?

    Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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.

    KATITAS' Earnings Growth And 22% ROE

    Firstly, we acknowledge that KATITAS has a significantly high ROE. Second, a comparison with the average ROE reported by the industry of 12% also doesn't go unnoticed by us. Probably as a result of this, KATITAS was able to see a decent net income growth of 8.3% over the last five years.

    As a next step, we compared KATITAS' net income growth with the industry and were disappointed to see that the company's growth is lower than the industry average growth of 12% in the same period.

    past-earnings-growth
    TSE:8919 Past Earnings Growth December 17th 2025

    Earnings growth is an important metric to consider when valuing a stock. 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. Is 8919 fairly valued? This infographic on the company's intrinsic value has everything you need to know.

    Is KATITAS Using Its Retained Earnings Effectively?

    With a three-year median payout ratio of 48% (implying that the company retains 52% of its profits), it seems that KATITAS is reinvesting efficiently in a way that it sees respectable amount growth in its earnings and pays a dividend that's well covered.

    Besides, KATITAS has been paying dividends over a period of eight years. This shows that the company is committed to sharing profits with its shareholders.

    Summary

    Overall, we are quite pleased with KATITAS' 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 a good amount of growth in its earnings. 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.