Goodwill Entertainment Holding (Catalist:GEH) has had a rough month with its share price down 10.0%. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. In this article, we decided to focus on Goodwill Entertainment Holding’s ROE.
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company’s shareholders.
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for Goodwill Entertainment Holding is:
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21% = S$4.3m ÷ S$20m (Based on the trailing twelve months to June 2025).
The ‘return’ is the income the business earned over the last year. That means that for every SGD1 worth of shareholders’ equity, the company generated SGD0.21 in profit.
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. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.
To start with, Goodwill Entertainment Holding’s ROE looks acceptable. Further, the company’s ROE compares quite favorably to the industry average of 8.6%. This probably laid the ground for Goodwill Entertainment Holding’s significant 62% net income growth seen over the past five years. We believe that there might also be other aspects that are positively influencing the company’s earnings growth. Such as – high earnings retention or an efficient management in place.
As a next step, we compared Goodwill Entertainment Holding’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 14%.
Catalist:GEH Past Earnings Growth October 22nd 2025
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. 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. Is GEH fairly valued? This infographic on the company’s intrinsic value has everything you need to know.
The high three-year median payout ratio of 62% (implying that it keeps only 38% of profits) for Goodwill Entertainment Holding suggests that the company’s growth wasn’t really hampered despite it returning most of the earnings to its shareholders.
While Goodwill Entertainment Holding has been growing its earnings, it only recently started to pay dividends which likely means that the company decided to impress new and existing shareholders with a dividend.
Overall, we are quite pleased with Goodwill Entertainment Holding’s performance. In particular, its high ROE is quite noteworthy and also the probable explanation behind its considerable earnings growth. Yet, the company is retaining a small portion of its profits. Which means that the company has been able to grow its earnings in spite of it, so that’s not too bad. So far, we’ve only made a quick discussion around the company’s earnings growth. To gain further insights into Goodwill Entertainment Holding’s past profit growth, check out this visualization of past earnings, revenue and cash flows.
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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.
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‘ Some details of this article were extracted from the following source finance.yahoo.com ’
