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    Is Sekisui House, Ltd.'s (TSE:1928) Recent Performance Tethered To Its Attractive Financial Prospects?

    Simply Wall St·01/01/2026 05:36:32
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    Sekisui House's (TSE:1928) stock up by 7.1% over the past three months. Given its impressive performance, we decided to study the company's key financial indicators as a company's long-term fundamentals usually dictate market outcomes. Particularly, we will be paying attention to Sekisui House's ROE today.

    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. 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 return on equity is:

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

    So, based on the above formula, the ROE for Sekisui House is:

    10% = JP¥204b ÷ JP¥2.0t (Based on the trailing twelve months to October 2025).

    The 'return' refers to a company's earnings over the last year. Another way to think of that is that for every ¥1 worth of equity, the company was able to earn ¥0.10 in profit.

    View our latest analysis for Sekisui House

    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 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.

    Sekisui House's Earnings Growth And 10% ROE

    To start with, Sekisui House's ROE looks acceptable. Further, the company's ROE compares quite favorably to the industry average of 8.3%. This probably laid the ground for Sekisui House's moderate 11% net income growth seen over the past five years.

    As a next step, we compared Sekisui House's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 4.4%.

    past-earnings-growth
    TSE:1928 Past Earnings Growth January 1st 2026

    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. If you're wondering about Sekisui House's's valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

    Is Sekisui House Making Efficient Use Of Its Profits?

    Sekisui House has a healthy combination of a moderate three-year median payout ratio of 40% (or a retention ratio of 60%) and a respectable amount of growth in earnings as we saw above, meaning that the company has been making efficient use of its profits.

    Additionally, Sekisui House 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.

    Summary

    In total, we are pretty happy with Sekisui House's performance. Particularly, we like that the company is reinvesting heavily into its business, and at a high rate of return. Unsurprisingly, this has led to an impressive earnings growth. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.