Sun International’s (JSE:SUI) Sky-High ROE: A Sign of Strength or a Cause for Concern?
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Sun International Limited (JSE:SUI) is a South African-based gaming and hospitality company with operations in Africa, Latin America, and Europe. The company has a strong track record of profitability, with a return on equity (ROE) of 58% in the most recent fiscal year.
An ROE of 58% is considered to be very high, and it is well above the average ROE for companies in the gaming and hospitality industry. This suggests that Sun International is able to generate a high return on the equity that it has invested in its business.
There are a number of factors that could contribute to Sun International’s high ROE. One factor is the company’s strong brand recognition. Sun International is one of the most well-known gaming and hospitality brands in Africa, and this gives the company a competitive advantage.
Another factor is the company’s focus on high-margin businesses. Sun International operates a number of casinos, hotels, and resorts, which are all high-margin businesses. This means that the company is able to generate a high level of profit from each dollar of revenue that it generates.
Finally, Sun International has a relatively low level of debt. This means that the company is not paying a large amount of interest on its debt, which allows it to retain more of its profits.
Overall, Sun International’s ROE of 58% is a very impressive figure. The company’s strong brand recognition, focus on high-margin businesses, and low level of debt all contribute to its high profitability.
Investors who are looking for a company with a strong track record of profitability may want to consider investing in Sun International.
