Is Geo Energy Resources Limited’s (SGX:RE4) Stock Price Struggling As A Result Of Its Mixed Financials?

Simply Wall St

Sat, February 14, 2026 at 11:33 AM GMT+9 4 min read

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With its stock down 6.7% over the past three months, it is easy to disregard Geo Energy Resources (SGX:RE4). It is possible that the markets have ignored the company’s differing financials and decided to lean-in to the negative sentiment. 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. In this article, we decided to focus on Geo Energy Resources’ ROE.

Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. Put another way, it reveals the company’s success at turning shareholder investments into profits.

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How To Calculate Return On Equity?

The formula for return on equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Geo Energy Resources is:

5.0% = US$27m ÷ US$533m (Based on the trailing twelve months to September 2025).

The ‘return’ is the yearly profit. One way to conceptualize this is that for each SGD1 of shareholders’ capital it has, the company made SGD0.05 in profit.

See our latest analysis for Geo Energy Resources

Why Is ROE Important For Earnings Growth?

So far, we’ve learned that ROE is a measure of a company’s profitability. Depending on how much of these profits the company reinvests or “retains”, and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don’t have the same features.

A Side By Side comparison of Geo Energy Resources’ Earnings Growth And 5.0% ROE

When you first look at it, Geo Energy Resources’ ROE doesn’t look that attractive. Yet, a closer study shows that the company’s ROE is similar to the industry average of 5.0%. Having said that, Geo Energy Resources’ five year net income decline rate was 21%. Bear in mind, the company does have a slightly low ROE. Hence, this goes some way in explaining the shrinking earnings.

That being said, we compared Geo Energy Resources’ performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 0.4% in the same 5-year period.

Story Continues  

SGX:RE4 Past Earnings Growth February 14th 2026

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. This then helps them determine if the stock is placed for a bright or bleak future. Is Geo Energy Resources fairly valued compared to other companies? These 3 valuation measures might help you decide.

Is Geo Energy Resources Using Its Retained Earnings Effectively?

Despite having a normal three-year median payout ratio of 33% (where it is retaining 67% of its profits), Geo Energy Resources has seen a decline in earnings as we saw above. It looks like there might be some other reasons to explain the lack in that respect. For example, the business could be in decline.

Moreover, Geo Energy Resources has been paying dividends for nine years, which is a considerable amount of time, suggesting that management must have perceived that the shareholders prefer consistent dividends even though earnings have been shrinking. Based on the latest analysts’ estimates, we found that the company’s future payout ratio over the next three years is expected to hold steady at 30%. Regardless, the future ROE for Geo Energy Resources is predicted to rise to 21% despite there being not much change expected in its payout ratio.

Conclusion

Overall, we have mixed feelings about Geo Energy Resources. 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. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company’s earnings growth rate. To know more about the company’s future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.

Have feedback on this article? Concerned about the content? Get in touch** with us directly.**_ Alternatively, email editorial-team (at) simplywallst.com._

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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