ManTech International Corporation (NASDAQ:MANT) shares slide but fundamentals look decent: Will the market correct the stock price going forward?

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ManTech International (NASDAQ:MANT) had a tough three months with its share price down 9.5%. However, stock prices are usually determined by a company’s long-term finances, which in this case seem quite respectable. Specifically, we decided to study the ROE of ManTech International in this article.

Return on equity or ROE is a key metric used to gauge how effectively a company’s management is using the company’s capital. In other words, it reveals the company’s success in turning shareholders’ investments into profits.

Check out our latest analysis for ManTech International

How do you calculate return on equity?

Return on equity can be calculated using the formula:

Return on equity = Net income (from continuing operations) ÷ Equity

So, based on the above formula, the ROE for ManTech International is:

8.0% = $131 million ÷ $1.6 billion (based on trailing 12 months to June 2021).

“Yield” is the income the business has earned over the past year. Another way to think about this is that for every dollar of equity, the company was able to make a profit of $0.08.

Why is ROE important for earnings growth?

So far we have learned that ROE is a measure of a company’s profitability. Based on the share of its profits that the company chooses to reinvest or “keep”, we are then able to assess a company’s future ability to generate profits. Generally speaking, all things being equal, companies with high return on equity and earnings retention have a higher growth rate than companies that do not share these attributes.

ManTech International earnings growth and ROE of 8.0%

At first glance, ManTech International’s ROE does not look very promising. Then, compared to the industry average ROE of 16%, the company’s ROE leaves us even less excited. However, the moderate 15% net income growth seen by ManTech International over the past five years is definitely positive. We believe there could be other factors at play here. Such as – high revenue retention or effective management in place.

We then performed a comparison of ManTech International’s net income growth with the industry, which revealed that the company’s growth is similar to the average industry growth of 15% over the same period. .

NasdaqGS: MANT Past Earnings Growth October 8, 2021

Earnings growth is an important factor in stock valuation. It is important for an investor to know whether the market has priced in the expected growth (or decline) in the company’s earnings. This will help them determine if the future of the title looks bright or ominous. Has the market priced in MANT’s future prospects? You can find out in our latest infographic research report on intrinsic value.

Does ManTech International effectively reinvest its profits?

With a three-year median payout ratio of 43% (implying the company retains 57% of its earnings), it appears that ManTech International is effectively reinvesting to see respectable earnings growth and paying a dividend that is well covered.

Also, ManTech International has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. After reviewing the latest analyst consensus data, we found that the company is expected to continue to pay out around 45% of its earnings over the next three years. However, ManTech International’s ROE is expected to reach 9.8% despite no expected change in its payout ratio.

Summary

Overall, we believe ManTech International has positive attributes. With a high reinvestment rate, albeit at a low ROE, the company managed to see considerable growth in earnings. That said, the latest forecasts from industry analysts show that the company’s earnings growth is expected to slow. To learn more about the latest analyst forecasts for the company, check out this analyst forecast visualization for the company.

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