<div id="readability-page-1"><div><p>Afrimat (JSE:AFT) has had a rough week with its share price down 10%.   It seems that the market might have completely ignored the positive aspects of the company's fundamentals and decided to weigh-in more on the negative aspects.  Stock prices are usually driven by a company’s financial performance over the long term, and therefore we decided to pay more attention to the company's financial performance.     Particularly, we will be paying attention to Afrimat's  ROE today.</p><p> Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested.  Simply put, it is used to assess the profitability of a company in relation to its equity capital. </p><p>We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.</p><h2> How Is ROE Calculated? </h2><p> The <strong>formula for ROE</strong> is: </p><p> Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity </p><p>So, based on the above formula, the ROE for Afrimat is:</p><p>4.2% = R190m ÷ R4.5b (Based on the trailing twelve months to August 2025).</p><p> The 'return' refers to a company's earnings over the last year.  That means that for every ZAR1 worth of shareholders' equity, the company generated ZAR0.04 in profit. </p><p><span> Check out our latest analysis for Afrimat </span></p> <h2> What Has ROE Got To Do With Earnings Growth? </h2><p> We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings.  We now need to evaluate how much profit the company reinvests or &#34;retains&#34; for future growth which then gives us an idea about the growth potential of the company.  Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. </p><h2> Afrimat's Earnings Growth And 4.2% ROE  </h2><p> As you can see, Afrimat's ROE looks pretty weak.   Not just that, even compared to the industry average of 34%, the company's ROE is entirely unremarkable.   For this reason, Afrimat's five year net income decline of 18% is not surprising given its lower ROE.  We believe that there also might be other aspects that are negatively influencing the company's earnings prospects.  For instance, the company has a very high payout ratio, or is faced with competitive pressures.    </p><p> So, as a next step, we compared Afrimat's performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 21% over the last few years.   </p><figure><img height="668" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/29618426-past-earnings-growth-1-dark-2/1768969384069?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1642" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/29618426-past-earnings-growth-1-dark-2/1768969384069"/><figcaption>JSE:AFT Past Earnings Growth January 21st 2026</figcaption></figure><p> The basis for attaching value to a company is, to a great extent, tied to its earnings growth.  The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in.  By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await.    Is AFT fairly valued? This infographic on the company's intrinsic value  has everything you need to know.   </p><h2> Is Afrimat Making Efficient Use Of Its Profits?  </h2> <p> Despite having a normal three-year median payout ratio of 35% (where it is retaining 65% of its profits), Afrimat has seen a decline in earnings as we saw above.  So there could be some other explanations in that regard. For instance, the company's business may be deteriorating.   </p> <p> Additionally, Afrimat has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth.      Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 34% of its profits over the next three years.   Regardless, the future ROE for Afrimat is predicted to rise to 9.4% despite there being not much change expected in its payout ratio.    </p> <h2> Conclusion  </h2> <p>In total, we're a bit ambivalent about Afrimat's performance.      While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth.       Having said that, looking at current analyst estimates, we found that the company's earnings growth rate is expected to see a huge improvement.     To know more about the company's future earnings growth forecasts take a look at this <strong>free</strong> report on analyst forecasts for the company to find out more.</p></div></div>

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<p>Afrimat Limited (JSE:AFT) has experienced a 10% decline in share price, reflecting negative market sentiment despite some positive fundamentals. The company's return on equity (ROE) stands at 4.2%, significantly below the industry average of 34%, contributing to a five-year net income decline of 18%. Although Afrimat retains a high percentage of profits for reinvestment, its low ROE raises concerns about future earnings growth. Analysts predict an improvement in earnings growth, with future ROE expected to rise to 9.4%.</p>

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Is The Market Rewarding Afrimat Limited (JSE:AFT) With A Negative Sentiment As A Result Of Its Mixed Fundamentals?