Most readers would already be aware that Schroder Real Estate Investment Trust’s (LON:SREI) stock increased significantly by 11% over the past three months. But the company’s key financial indicators appear to be differing across the board and that makes us question whether or not the company’s current share price momentum can be maintained. Particularly, we will be paying attention to Schroder Real Estate Investment Trust’s ROE today.
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. Put another way, it reveals the company’s success at turning shareholder investments into profits.
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for Schroder Real Estate Investment Trust is:
9.8% = UK£30m ÷ UK£303m (Based on the trailing twelve months to September 2025).
The ‘return’ refers to a company’s earnings over the last year. So, this means that for every £1 of its shareholder’s investments, the company generates a profit of £0.10.
View our latest analysis for Schroder Real Estate Investment Trust
So far, we’ve learned that ROE is a measure of a company’s profitability. 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 everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don’t necessarily bear these characteristics.
At first glance, Schroder Real Estate Investment Trust’s ROE doesn’t look very promising. However, the fact that the company’s ROE is higher than the average industry ROE of 7.7%, is definitely interesting. However, Schroder Real Estate Investment Trust has seen a flattish net income growth over the past five years, which is not saying much. Bear in mind, the company does have a slightly low ROE. It is just that the industry ROE is lower. Therefore, the low to flat growth in earnings could also be the result of this.
Next, on comparing with the industry net income growth, we found that Schroder Real Estate Investment Trust’s reported growth was a little less than the industry growth of1.4% over the last few years.
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company’s expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. Is Schroder Real Estate Investment Trust fairly valued compared to other companies? These 3 valuation measures might help you decide.
Schroder Real Estate Investment Trust has a very high three-year median payout ratio of 84% (or a retention ratio of 16%). However, it’s not unusual to see a REIT with such a high payout ratio mainly due to statutory requirements. So this probably explains the absence of growth in earnings.
Additionally, Schroder Real Estate Investment Trust has paid dividends over a period of at least ten years, which means that the company’s management is determined to pay dividends even if it means little to no earnings growth.
On the whole, we feel that the performance shown by Schroder Real Estate Investment Trust can be open to many interpretations. Primarily, we are disappointed to see a lack of growth in earnings even in spite of a moderate ROE. Bear in mind, the company reinvests a small portion of its profits, which explains the lack of growth. Until now, we have only just grazed the surface of the company’s past performance by looking at the company’s fundamentals. So it may be worth checking this free detailed graph of Schroder Real Estate Investment Trust’s past earnings, as well as revenue and cash flows to get a deeper insight into the company’s performance.
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