Samsung is a global leader in the smartphone and electronics industry, but it has struggled in recent years. Here are some of the fundamentals you need to know about the company’s performance, as well as some of the challenges it will face in the months and years to come.
What is Samsung’s market capitalization?
Samsung is recognized as Interbrand’s Best Global Brands 2019 as the sixth most valuable brand globally. Samsung Electronics Co., Ltd ranks sixth on Interbrand’s “Best Global Brands 2019” list, worth $61.1 billion, 2% above its brand value.
Samsung’s market capitalization has varied dramatically in recent years. In the spring of 2017, the South Korean company was worth nearly $710 billion. By July 2018, it had dropped to $260 billion, and Statista’s latest estimate puts its current market capitalization at around $400 billion. Why the sudden change in market capitalization? In large part, it’s because of the fall in the stock price – the stock price is now just a small fraction of its previous peak. Samsung has reported declining revenues and profits in recent years, and the company has tried to shift its focus to cloud and mobile computing, smartphones, memory chips, and automotive components. Despite efforts to diversify, the smartphone division is still Samsung’s largest segment.
What is Samsung’s net profit margin?
Announcing the 2021 financial results, Samsung has an operating profit of 9.05 trillion won, about $8.1 billion, and ends the fourth quarter up 26.4%. This means that Samsung has increased its profitability over the previous year, although Samsung has not increased its sales revenue. In other words, Samsung’s profits could have been higher if it could have increased its sales revenue a little more, or even maintained its sales revenue if it hadn’t increased its earnings a little more. To increase sales revenue and increase its net profit margin, Samsung would need to launch a new phone or a new product to improve its revenue and lower its cost of sales. Unfortunately for Samsung, it doesn’t have a lot of untapped revenue or sales costs.
What is Samsung’s ROE?
ROE, or return on equity, is a measure of profitability that considers a company’s balance sheet. The higher the ROE, the more profitable the company will be. By way of comparison, if you owned 100 shares of Samsung stock, you could make, say, $100,000 in profit and still have $100,000 left to invest. A common way to calculate return on equity is to calculate net income divided by total assets. The more assets a company has on its balance sheet, the higher its ROE and its profitability. In Samsung’s most recent full fiscal year (ended September 30, 2017), net income was 11.1 trillion South Korean won or about $10.05 billion in US dollars. Total assets for the same period were 117.8 trillion South Korean won or about $115.24 billion in US dollars.
What is Samsung’s PEG ratio?
The PEG ratios take last year’s earnings per share (EPS) and compare it to the company’s average EPS over the previous five years, for a number between 1 and 2. A lower PEG ratio is better for stock and indicates that it is currently undervalued than its past performance. Samsung’s PEG to EPS ratio last year of 3.49 is 0.6. This means that the PEG index is below the 5-year average of 1.4. Samsung’s 5-year average PEG index is 0.8. Why It’s Time to Consider Buying Samsung Stocks The PEG index has been shown to work well with overvalued stocks. Samsung is currently trading at a PEG index of 0.6. This means that the PEG index is currently below the 5-year average PEG index, with Samsung undervalued at the moment.
What are Samsung’s main challenges?
The smartphone market is saturated. As mentioned earlier, Samsung is a global leader in the smartphone and consumer electronics industries, but the company faces headwinds as consumers hold their current devices longer than ever before. In response, Samsung focused on innovation rather than simply continuing to make smartphones. The company has launched the Galaxy S21, and the device is likely to be a big seller shortly. However, the iPhone 12 – which many believe is the best smartphone Apple has ever made – and is expected to release several updated models before the end of the year.
Although the company recently reported a quarter of record earnings, it faces challenges in the smartphone and screen markets and faces a government investigation in South Korea. As long-term investors, we are confident in Samsung’s future because the company continues to be an industry leader with technology that creates a barrier to competition. Samsung will further grow as an industry leader, but the company faces some regulatory challenges that will weigh on its sales for the foreseeable future. The long-term picture may look even better than it does now because of these concerns, but there are certainly some challenges on the horizon for Samsung investors.