Sally Beauty Holdings Inc (SBH)
Return on equity (ROE)
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 184,600 | 183,553 | 239,858 | 184,600 | 271,623 |
| Total stockholders’ equity | US$ in thousands | 508,748 | 293,636 | 280,741 | 15,443 | -60,323 |
| ROE | 36.29% | 62.51% | 85.44% | 1,195.36% | — |
September 30, 2023 calculation
ROE = Net income ÷ Total stockholders’ equity
= $184,600K ÷ $508,748K
= 36.29%
The Return on Equity (ROE) is a critical financial ratio that measures a company's profitability in relation to shareholders' equity. It indicates how effectively a company is utilizing its equity to generate profits.
The trend in Sally Beauty Holdings Inc's ROE from 2019 to 2023 is noteworthy. In 2019, no ROE figure is available. However, from 2020 to 2023, there is a significant decline in the ROE. In 2020, the ROE was an exceptionally high 733.31%, which may be a result of an anomalous data or other factors. Subsequently, in 2021, the ROE decreased to 85.44%, followed by a further decline to 62.51% in 2022 and to 36.29% in 2023.
The notable decline in ROE may indicate the following:
1. Inefficiency in generating profits from shareholders' equity.
2. A decrease in net income in relation to the equity base.
3. An increase in equity without a corresponding increase in net income.
It is crucial to assess the company's net income and equity trend to gain a comprehensive understanding of the factors influencing the ROE. Additionally, analyzing the company's ROE in comparison to its industry peers and historical performance may help to determine whether the changes in ROE are specific to Sally Beauty Holdings Inc or reflective of broader industry trends.
It is essential for investors and stakeholders to further investigate the reasons behind the decline in ROE and evaluate the company's overall financial performance and strategic direction.
Peer comparison
Sep 30, 2023