Global Business Services
Nestle 2021 & 2022 – Profitability Ratios
(Investor Ratios)
GROUP 5
USHALLINNI PUGUNISPARAM
CHEONG KAH KIT
GRACE TAN HUI YING
LOW KENG YIK
THINESH
LEE KOK YOONG
• Profitability ratios assess a company's ability to earn profits from its sales or operations, balance sheet assets, or shareholders' equity.
• They indicate how efficiently a company generates profit and value for shareholders.
1
PRICE EARNING RATIO
> To determine how much investors are willing to pay for a stock
Key Highlights
Share Price /
Earnings per Share
Price Earning
Ratio
1.
2021
2022
RM134.20 / RM2.4299
= 55.23
RM140.00 / RM2.6453
= 52.92
2.
3.
4.
Note: Earnings = Profit distributable to ordinary
shareholders i.e., after interest, tax and any
preference dividend
Global Business Services
5.
6.
From YoY perspective, there is a decrease in the price
earning ratio.
2 variables that derives the price earning ratio a) Share
price and b) earning per share which is deduced by
earnings/weighted average shares outstanding.
Movement in share price is largely driven by the market
forces and speculation and it directly correlates to the P/E
ratio. In this example, we could clearly see an increase in
the share price from FY 2022 vs 2021 (which could be due
to the impact of the overall market recovery from pandemic
or business strategies.
From YoY, there is no increase/decrease in the weighted
average number of shares in issue, and thus the EPS is
largely impacted due to increase income by 8.9%
A decrease in P/E ratio indicates a decrease in the share
price valuation in relation to the current level of earnings.
On average for FMCG industry, P/E ratio should average
from 30 to 50
DIVIDEND YIELD
> Shows how much a company pays out in dividends to its stock price
Dividend Yield
Key Highlights
Annual Dividends per Share
/ Share Price
2021
1.
From YoY perspective, there is an increase in the dividend
yield contributed by increase in the dividend per share by
8% due to increase in our share price
2.
In 2022 vs 2021, there is an 0.1% increase in the company
share price that it pays out in dividend.
2022
RM2.4299 / RM134.20
= 0.018
= 1.8%
RM2.653 / RM140.00
= 0.019
= 1.9%
Global Business Services
DIVIDEND PAYOUT
> Shows percentage of earnings paid to shareholders via dividends
Dividend
Payout
Key Highlights
Annual Dividends per Share
/ EPS
2021
2022
RM2.42 / RM2.4299
= 0.996
= 99.6%
RM2.62 / RM2.6453
= 0.990
= 99.0%
Global Business Services
1.
Dividend payout ratio evaluates the percentage of profits
earned that a company pays out to its shareholders,
2.
In the case of Nestle Malaysia, it paid out a constant
dividend ratio of 99% in the last 2 years with only 1% being
retained for business operations
Global Business Services
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