{"id":1984577,"date":"2025-08-28T13:01:06","date_gmt":"2025-08-28T13:01:06","guid":{"rendered":"https:\/\/celebrity.land\/en\/?p=1984577"},"modified":"2025-08-28T13:01:06","modified_gmt":"2025-08-28T13:01:06","slug":"is-the-market-following-fundamentals","status":"publish","type":"post","link":"https:\/\/celebrity.land\/en\/is-the-market-following-fundamentals\/","title":{"rendered":"Is the Market Following Fundamentals?"},"content":{"rendered":"<p><\/p>\n<div>\n<div class=\"atoms-wrapper\">\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->Tencent Music Entertainment Group (NYSE:TME) has had a great run on the share market with its stock up by a significant 53% over the last three months. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/au.finance.yahoo.com\/quote\/TME\" data-ylk=\"slk:Tencent Music Entertainment Group's;elm:context_link;itc:0;sec:content-canvas\" class=\"link \">Tencent Music Entertainment Group&#8217;s <\/a> ROE in this article.<!-- HTML_TAG_END --><\/p>\n<p> <iframe data-testid=\"offers-cds-iframe\" class=\"iframe yf-zhtypo\" src=\"https:\/\/templates.cds.yahoo.com\/remote\/widget?campaignId=e72c3590-5daa-4b1b-a5bf-52b75140bd82&amp;lineItemId=2e2640fe-c05f-41ac-be3f-57bdb8a08051&amp;site=finance&amp;contentId=f1eacb53-227d-3904-b86e-17230f66aa5c&amp;spaceId=1183300100&amp;providerId=simply_wall_st__316\" title=\"\" aria-hidden=\"true\" loading=\"lazy\"><\/iframe><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors\u2019 money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START --><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/simplywall.st\/discover\/investing-ideas\/434423\/us-midstream-oil-and-gas-pipeline-operators\/global?blueprint=4022509&amp;utm_medium=finance_user&amp;utm_campaign=investing-ideas&amp;utm_source=yahoo&amp;utm_content=us-oil-gas-pipeline-operators\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Trump has pledged to &quot;unleash&quot; American oil and gas and these 15 US stocks have developments that are poised to benefit.;elm:context_link;itc:0;sec:content-canvas\" class=\"link \">Trump has pledged to &#8220;unleash&#8221; American oil and gas and these 15 US stocks have developments that are poised to benefit.<\/a><!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START --><strong>ROE can be calculated by using the formula:<\/strong><!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->Return on Equity = Net Profit (from continuing operations) \u00f7 Shareholders&#8217; Equity<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->So, based on the above formula, the ROE for Tencent Music Entertainment Group is:<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->12% = CN\u00a511b \u00f7 CN\u00a586b (Based on the trailing twelve months to June 2025).<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->The &#8216;return&#8217; is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each $1 of shareholders&#8217; capital it has, the company made $0.12 in profit.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START --><span class=\"veryHighlightLink\"><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/simplywall.st\/company\/id\/3E083072-9928-41B3-9736-E1CE49779FFB?blueprint=4022509&amp;utm_medium=finance_user&amp;utm_campaign=cta&amp;utm_source=yahoo\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:View our latest analysis for Tencent Music Entertainment Group;elm:context_link;itc:0;sec:content-canvas\" class=\"link \"> View our latest analysis for Tencent Music Entertainment Group <\/a><\/span><!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->We have already established that ROE serves as an efficient profit-generating gauge for a company&#8217;s future earnings. Based on how much of its profits the company chooses to reinvest or &#8220;retain&#8221;, we are then able to evaluate a company&#8217;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&#8217;t have the same features.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->To begin with, Tencent Music Entertainment Group seems to have a respectable ROE. Even when compared to the industry average of 12% the company&#8217;s ROE looks quite decent. Consequently, this likely laid the ground for the decent growth of 20% seen over the past five years by Tencent Music Entertainment Group.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->Next, on comparing with the industry net income growth, we found that Tencent Music Entertainment Group&#8217;s reported growth was lower than the industry growth of 31% over the last few years, which is not something we like to see.<!-- HTML_TAG_END --><\/p>\n<figure class=\"yf-8xybrv\">\n<div class=\"image-container yf-1gfnohs loader\" style=\"--max-height: 391px;\">\n<div class=\"image-wrapper yf-1gfnohs\" style=\"--aspect-ratio: 960 \/ 391; --img-max-width: 960px;\"><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/simplywall.st\/company\/id\/3E083072-9928-41B3-9736-E1CE49779FFB\/past?blueprint=4022509&amp;utm_medium=finance_user&amp;utm_campaign=infographic&amp;utm_source=yahoo\" target=\"_blank\" rel=\"noopener noreferrer\"><\/a><\/div>\n<\/div><figcaption class=\"yf-8xybrv\"><!-- HTML_TAG_START -->NYSE:TME Past Earnings Growth August 28th 2025<!-- HTML_TAG_END -->  <\/figcaption><\/figure>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It\u2019s important for an investor to know whether the market has priced in the company&#8217;s expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. One good indicator of expected earnings growth is the P\/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/simplywall.st\/company\/id\/3E083072-9928-41B3-9736-E1CE49779FFB\/valuation?blueprint=4022509&amp;utm_medium=finance_user&amp;utm_campaign=conclusion&amp;utm_source=yahoo\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:check if Tencent Music Entertainment Group is trading on a high P\/E or a low P\/E;elm:context_link;itc:0;sec:content-canvas\" class=\"link \">check if Tencent Music Entertainment Group is trading on a high P\/E or a low P\/E<\/a>, relative to its industry.<!-- HTML_TAG_END --><\/p>\n<\/p><\/div>\n<p><button class=\"secondary-btn fin-size-large readmore-button  rounded   yf-3zn7qw\" data-ylk=\"elm:readmore;itc:1;sec:content-canvas;slk:Story%20Continues\" aria-label=\"Story Continues\" title=\"Story Continues\"> <span>Story Continues<\/span><\/button> <\/p>\n<div class=\"read-more-wrapper\" style=\"display: none\" data-testid=\"read-more\">\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->With a three-year median payout ratio of 29% (implying that the company retains 71% of its profits), it seems that Tencent Music Entertainment Group is reinvesting efficiently in a way that it sees respectable amount growth in its earnings and pays a dividend that&#8217;s well covered.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->While Tencent Music Entertainment Group has seen growth in its earnings, it only recently started to pay a dividend. It is most likely that the company decided to impress new and existing shareholders with a dividend. Our latest analyst data shows that the future payout ratio of the company over the next three years is expected to be approximately 27%. Accordingly, forecasts suggest that Tencent Music Entertainment Group&#8217;s future ROE will be 15% which is again, similar to the current ROE.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START -->Overall, we are quite pleased with Tencent Music Entertainment Group&#8217;s performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see a good amount of growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company&#8217;s earnings growth is expected to slow down. To know more about the company&#8217;s future earnings growth forecasts take a look at this <strong>free<\/strong> <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/simplywall.st\/company\/id\/3E083072-9928-41B3-9736-E1CE49779FFB\/future?blueprint=4022509&amp;utm_medium=finance_user&amp;utm_campaign=conclusion&amp;utm_source=yahoo\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:report on analyst forecasts for the company to find out more.;elm:context_link;itc:0;sec:content-canvas\" class=\"link \">report on analyst forecasts for the company to find out more.<\/a><!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1090901\"><!-- HTML_TAG_START --><strong>Have feedback on this article? Concerned about the content?<\/strong> <span><strong>Get in touch<\/strong><\/span><strong> with us directly.<\/strong><i> Alternatively, email editorial-team (at) simplywallst.com.<\/i><\/p>\n<p><i>This article by Simply Wall St is general in nature. <strong>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.<\/strong> 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.<\/i><!-- HTML_TAG_END --><\/p>\n<\/p><\/div><\/div>\n<p><em> \u2018 The preceding article may include information circulated by third parties \u2019 <\/em><\/p>\n<p><em> \u2018 Some details of this article were extracted from the following source finance.yahoo.com \u2019 <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tencent Music Entertainment Group (NYSE:TME) has had a great run on the share market with its stock up by a significant 53% over the last three months. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Tencent Music Entertainment [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1949229,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"footnotes":""},"categories":[25172],"tags":[356942,356941,314019],"class_list":["post-1984577","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-entertainment","tag-earnings-growth","tag-roe","tag-tencent-music-entertainment"],"jetpack_featured_media_url":"https:\/\/celebrity.land\/en\/wp-content\/uploads\/2025\/08\/Starz-Entertainment-Corp-NASDAQSTRZ-stock-most-popular-amongst-individual-investors.jpeg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/posts\/1984577","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/comments?post=1984577"}],"version-history":[{"count":0,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/posts\/1984577\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/media\/1949229"}],"wp:attachment":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/media?parent=1984577"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/categories?post=1984577"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/tags?post=1984577"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}