Is Trican Well Service Ltd.'s (TSE:TCW) Recent Stock Performance Tethered To Its Strong Fundamentals?

Simply Wall St
·3 min read

Trican Well Service's (TSE:TCW) stock is up by a considerable 11% over the past month. Given the company's impressive performance, we decided to study its financial indicators more closely as a company's financial health over the long-term usually dictates market outcomes. Specifically, we decided to study Trican Well Service's ROE in this article.

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.

Check out our latest analysis for Trican Well Service

How To Calculate Return On Equity?

ROE can be calculated by using the formula:

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

So, based on the above formula, the ROE for Trican Well Service is:

13% = CA$63m ÷ CA$489m (Based on the trailing twelve months to September 2022).

The 'return' is the yearly profit. Another way to think of that is that for every CA$1 worth of equity, the company was able to earn CA$0.13 in profit.

Why Is ROE Important For Earnings Growth?

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 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.

A Side By Side comparison of Trican Well Service's Earnings Growth And 13% ROE

To begin with, Trican Well Service seems to have a respectable ROE. Even when compared to the industry average of 11% the company's ROE looks quite decent. Consequently, this likely laid the ground for the decent growth of 7.1% seen over the past five years by Trican Well Service.

We then compared Trican Well Service'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 4.3% in the same period.

past-earnings-growth
past-earnings-growth

Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. What is TCW worth today? The intrinsic value infographic in our free research report helps visualize whether TCW is currently mispriced by the market.

Is Trican Well Service Efficiently Re-investing Its Profits?

Given that Trican Well Service doesn't pay any dividend to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.

Conclusion

In total, we are pretty happy with Trican Well Service'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 are expected to accelerate. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

  • Up next
  • Up next
  • Up next
  • Up next

Latest Stories

  • The 30 best Walmart deals to shop this week — save up to 80% on Mother's Day gifts, gardening supplies and more

    Some major deals on board: a Dyson stick vac for just $300, an HP laptop for $240 off and a powerful tower fan at a nearly 40%-plus markdown.

  • Korey Cunningham, a former NFL lineman, found dead in his New Jersey home. He was 28

    CLIFTON, N.J. (AP) — Korey Cunningham, an offensive lineman who played for three NFL teams during a five-year career, has died. He was 28. Police said Cunningham was found dead Thursday in his Clifton, New Jersey, home. Officers had gone to the home after a family member reported they could not contact Cunningham. The cause of death remains under investigation. Police said there was no evidence of foul play. Cunningham, who played at the University of Cincinnati, was a seventh-round draft pick o

  • Stranded ships exit Baltimore port via temporary channel

    Four cargo ships, stuck for about a month at the Port of Baltimore by the ruins of the collapsed Francis Scott Key bridge, have exited this week via a temporary channel, according to shipping data. The Balsa 94, a general cargo carrier, on Thursday was the first to exit Baltimore Harbor via a new channel that is 300 feet (91 meters) wide and at least 35 feet (11 meters) deep. Other exiting ships were the Saimaagracht, a Netherlands-flagged general cargo ship, the Carmen car carrier owned by Norwegian/Swedish shipping firm Wallenius Wilhelmsen and the Thailand-flagged bulk carrier Phatra Naree.

  • The family of Mexican serial killer's first known victim protest at the site where bones were found

    The family and supporters of a missing woman who may have been the first victim of a Mexico City serial killer protested Friday at the site where the bones and possessions of a half-dozen women were found last week. Protesters covered the facade of the apartment building with placards after investigators found the bones, cell phones and ID cards of several women at rented rooms there, apparent mementos of the killer's 12-year trail of victims. Most of the placards taped to the non-descript apartment building on the city's east side Friday asked variants of a single question: Why did it take prosecutors 12 years to investigate the disappearance of Amairany Roblero, then 18.

  • NFL to allow players to wear protective soft-shell helmet covers during games

    The NFL announced Friday it will allow players to wear protective soft-shell helmet covers known as Guardian caps during games next season if they choose. Defensive backs and receivers have joined the position groups now required to wear the caps during all contact practices. The NFL has mandated the caps' use at practices for some players since 2022.

  • Trump trial updates: Focus shifts to $130,000 payment made to Stormy Daniels

    Former National Enquirer publisher David Pecker concluded his testimony about a deal to kill negative stories about former President Trump during the 2016 campaign and two more witnesses were called.

  • What a TikTok ban could mean for creators

    President Biden has signed legislation that forces ByteDance, the parent company of TikTok, to either divest its operations or face a ban in the US. Xcel Brands CEO & ORME Co-Founder Robert D'Loren joins Yahoo Finance to discuss what the legislation means for content creators and brands moving forward. D'Loren acknowledges TikTok's status as "one of the most important social media platforms" for brands and influencers, offering opportunities for business growth and exposure. However, with uncertainty looming over TikTok's future in the United States, D'Loren advises users to "hope for the best, plan for the worst." Highlighting the resilience of the creative community, D'Lorene emphasizes their adaptability stating, "never underestimate a crowd." Even in the event of a TikTok ban, he expresses confidence that creators would find "the next best platform" to maintain their presence. "I think we're going to see more and more people, given the uncertainty with TikTok, beginning to migrate to new platforms," he tells Yahoo Finance. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance. This post was written by Angel Smith

  • Delta Flight Makes Emergency Return to N.Y.C. After Evacuation Slide Falls Off Plane

    The Federal Aviation Administration has launched an investigation into the incident with the Boeing 767 aircraft

  • 5 key players that inspired Leicester to immediate return to Premier League

    It has been a brilliant season for the Foxes under Enzo Maresca.

  • Dow Jones Futures: Nvidia Leads 7 New Buys As Market Roars; Fed, Apple, Super Micro Loom

    Nvidia and several other leaders flashed buy signals as the market roared. Investors should take advantage, but it's a jungle out there.

  • How to buy J.J. McCarthy's Minnesota Vikings jersey after 2024 NFL Draft selection

    The Minnesota Vikings have a new quarterback after taking Michigan's J.J. McCarthy in the first round. Buy his jersey here.

  • UPDATE 1-Hess sets May 28 shareholder vote on Chevron buyout

    Hess Corp set May 28 for a special meeting of shareholders to vote on Chevron Corp 's $53 billion buyout offer, the company said in a securities filing on Friday. Chevron last October offered to acquire Hess Corp in a move to gain a foothold in oil-rich Guyana's lucrative offshore fields. The deal has been stalled by a regulatory review and challenged by Exxon Mobil, which has filed an arbitration claim that could block the deal.

  • Charge dropped for man accused of flying 'terrorist flag'

    A charge against a Toronto man accused of flying what police deemed a "terrorist flag" at a pro-Palestinian demonstration earlier this year has been withdrawn. The accused, a 41-year-old man, was charged with publicly inciting hatred after marching down Queen Street W. and Bay Street on Jan. 7 allegedly waving the flag of the Popular Front for the Liberation of Palestine — an organization listed as a terrorist group by Public Safety Canada.The man's lawyer, Shane Martínez, said the charge was wi

  • Storm chasers capture tornado Friday in Cass County, Nebraska

    Storm chasers capture tornado Friday in Cass County, Nebraska

  • 'Flatters my natural curves': These top-selling tummy-control undies are down to just $4 a pair

    'They don't roll down. They don't cut into me ... they smooth out my stomach and backside just enough to look sexy but still realistic,' said one five-star fan.

  • Delta Airlines Boeing plane loses emergency slide in mid-air after JFK takeoff

    The flight bound for Los Angeles forced to return to New York

  • William Nylander practises with Leafs ahead of Game 4 against Bruins: 'Feeling great'

    TORONTO — William Nylander took a pass from John Tavares and wheeled towards the net. The Maple Leafs winger then deftly fed the puck against the grain on a tee for Mitch Marner to blast a one-timer from a sharp angle. The power-play sequence was only a practice drill. It was also one of many positive signs for the player — and a team that's opened the playoffs minus one of its key contributors. Nylander appears on course to join the action Saturday for Game 4 against the Boston Bruins with Toro

  • Northwestern students set up pro-Palestinian encampment as university changes protest policy

    Students at Northwestern University in Evanston, Illinois, have set up a tent encampment as student protests over the Israel-Hamas war have popped up on an increasing number of U.S. college campuses (AP Video:Teresa Crawford)

  • Why 49ers fans should love the Ricky Pearsall pick

    Yahoo Sports' Draft Live crew reacts to San Francisco's selection of the Florida wide receiver 31st overall in the 2024 NFL Draft.

  • Lord Cameron joins language lesson and pets horses during Mongolia visit

    The Foreign Secretary was in Central Asia as part of a bid to bolster trade, security and environmental ties.