This archive report was first published on 26 August 2019.
According to data generated by Dyer and Blair Investment Bank on August 16, 2019, manufacturing companies listed at the Nairobi Securities Exchange (NSE) recorded the highest investor returns as a proportion of equity investments.
The sector's median return on equity (ROE) was 30.47, with East African Breweries, BAT, and Kenya Orchards leading the pack with high ROEs.
ROEs are a measure of a company's profitability relative to shareholders' funds deployed. The high ROEs in the manufacturing sector can be attributed to the profitability of these firms.
Dividend yields have also been on the rise due to falling stock prices, with the NSE 20-Share Index currently at a decade-long low.
“On the ROE, one needs to look at the industry median and then compare with the individual company figure. For banks, for example, the ROEs were higher before the rate cap and they could return to higher levels in the event that that it is removed,” said Edwin Chui, head of research at Dyer and Blair Investment Bank.
Investors looking for long-term investments in the equities market should consider return on equity, as it shows the strength and efficiency of companies going into the future, according to Mercyline Gatebi-Kyalo, research head at Kingdom Securities.
