In today’s briefing:
- Concrete Measures to Raise ROA Are Needed to Achieve Medium-Term Stock Price Outperformance
Concrete Measures to Raise ROA Are Needed to Achieve Medium-Term Stock Price Outperformance
- If TSE were to require companies with low P/Bs to disclose improvement measures, more companies are likely to take immediate action to increase shareholder returns.
- Reducing equity capital is effective in raising ROE, but simply draining cash accumulated from the past through shareholder returns will not lead to long-term stock price outperformance.
- Among the components of ROE, ROA improvement is required rather than immediate increase in financial leverage. Companies should disclose their more detailed plans to increase ROA over the medium term.
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