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Author: Slavica Grabovac
Date of Publication: 02/01/2024
Samsung is a South Korean corporation known for being among the global leaders in manufacturing electronic devices. In particular, the company focuses on producing a diverse range of consumer and industrial electronics. Some of them are appliances, digital media devices, semiconductors, memory chips, and integrated systems. So, renowned for its technological contributions, Samsung stands as a major player in the industry and accounts for approximately 20% of South Korea's overall exports. Let's find out more about Samsung's growth potential for investors.
Fundamental Analysis
The debt to equity ratio is crucial for determining the long-term solvency of technology companies. This is because it measures how these companies use leverage or borrowed money to increase the company’s internal value.
Samsung has a healthy dividend of 2.7% and the dividend payout ratio is currently at 0.10. This means the total dividend payments are equal to 10% of the net income. What’s more, the dividend could potentially see a drastic increase if the company wishes to increase it. The 5 year dividend growth rate for Samsung is 27%, which is well above the inflation level. This is indicating the dividend is increasing on a real-inflation adjusted basis.
When we look at a company's efficiency, we can see that ROE is at 28%. That is two times higher than what is considered acceptable levels.
Technical Analysis
To understand the potential investment opportunity of Samsung, we will look closer into the technical analysis of its stock trends. Samsung's closing price continues to show a steady upward trend over the past year, aligned with relatively high levels of trading volume.
In terms of momentum, it has been hovering around the neutral zone for some time, but now is on “sell” for a 1 month timeframe. But the overall summary would be “buy”.
P/E ratio for Samsung stock in December 2023 is 13.6. Now, let’s connect the bullish trend on Samsung stock with its Q3 earnings release.
Q3 Earnings Report
In its Q3 earnings report, Samsung revealed quarterly revenue of $49.99 billion and an operating profit of $1.80 billion. While the revenue declined by 12.3% compared to the previous year, it increased by 12% from Q2. The operating profit saw a significant rise of over 262% compared to Q2.
Samsung anticipates further expansion in the smartphone market as it approaches the Q4 holiday season. Additionally, there are expectations of increased demand for tablets.
What's Samsung's Growth Potential for Investors in 2024?
To summarize, Samsung is a company with very good fundamentals. They have very solid efficiency and a healthy and secure dividend. What’s more, its stock was around the neutral zone, neither overbought or oversold. This suggested that there is no immediate pressure to buy or sell. Release of Q3 earnings has changed that due to a big increase.
Overall Samsung appears to be a solid investment option for those looking to invest in the technology sector. As with any investment, it is important to do your own research and carefully consider your investment goals and risk tolerance before making any decisions.
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