Analyzing Hyster-Yale's ROE and Earnings Growth for Long-Term Investors

Hyster-Yale's (NYSE:HY) share price has declined 11% over the past three months, but its fundamentals appear decent. The company's return on equity (ROE) is 4.2%, which is lower than the industry average of 13%. However, Hyster-Yale's net income growth has been exceptional at 36% over the past five years, higher than the industry average of 17%. This suggests that the company's earnings growth is driven by factors other than ROE, such as a low payout ratio or efficient management.

Hyster-Yale's (NYSE:HY) share price has experienced a decline of 11% over the past three months, yet the company's fundamentals appear to be in decent shape. The company's return on equity (ROE) stands at 4.2%, which is below the industry average of 13%. However, Hyster-Yale has demonstrated exceptional net income growth of 36% over the past five years, outperforming the industry average of 17% [1].

The ROE, calculated as net profit from continuing operations divided by shareholders' equity, indicates the profitability generated by each dollar of shareholder investment. Despite a relatively low ROE, Hyster-Yale has achieved remarkable earnings growth, suggesting that other factors are at play. One such factor could be a low payout ratio, which allows the company to reinvest a significant portion of its profits into the business. The company's three-year median payout ratio is 15%, indicating that 85% of profits are reinvested [1].

Moreover, Hyster-Yale's efficient management and strategic decisions have contributed to its earnings growth. The company has a history of paying dividends over the past decade, demonstrating its commitment to sharing profits with shareholders. This consistent dividend policy, along with the company's strong reinvestment strategy, has likely driven its earnings growth [1].

Recent earnings reports indicate that Hyster-Yale's quarterly dividend has been increased, reflecting the company's financial health and commitment to shareholders. The quarterly dividend was recently raised to $0.36 per share, with an annualized yield of 4.0% [2].

In summary, while Hyster-Yale's share price has declined, its fundamentals, such as ROE and earnings growth, suggest a solid underlying performance. The company's ability to generate impressive earnings growth despite a lower-than-average ROE highlights the importance of considering multiple factors when evaluating a company's financial health. Investors should continue to monitor Hyster-Yale's progress and consider the broader market outlook when making investment decisions.

References:
[1] https://finance.yahoo.com/news/declining-stock-decent-financials-market-170934375.html
[2] https://www.marketbeat.com/instant-alerts/q3-earnings-estimate-for-hyster-yale-issued-by-roth-capital-2025-08-11/