Evonik Industries AG’s (ETR:EVK) Has Been On A Rise But Financial Prospects Look Weak: Is The Stock Overpriced?

Simply Wall St

Mon, February 16, 2026 at 5:28 PM GMT+9 4 min read

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EVKIF

-3.95%

EVKIY

-3.07%

Evonik Industries’ (ETR:EVK) stock is up by a considerable 22% over the past month. We, however wanted to have a closer look at its key financial indicators as the markets usually pay for long-term fundamentals, and in this case, they don’t look very promising. Specifically, we decided to study Evonik Industries’ ROE in this article.

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. In simpler terms, it measures the profitability of a company in relation to shareholder’s equity.

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How Is ROE Calculated?

ROE can be calculated by using the formula:

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

So, based on the above formula, the ROE for Evonik Industries is:

7.7% = €646m ÷ €8.4b (Based on the trailing twelve months to December 2025).

The ‘return’ is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each €1 of shareholders’ capital it has, the company made €0.08 in profit.

Check out our latest analysis for Evonik Industries

Why Is ROE Important For Earnings Growth?

So far, we’ve learned that ROE is a measure of a company’s profitability. Based on how much of its profits the company chooses to reinvest or “retain”, we are then able to evaluate a company’s future ability to generate profits. 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 Evonik Industries’ Earnings Growth And 7.7% ROE

At first glance, Evonik Industries’ ROE doesn’t look very promising. However, its ROE is similar to the industry average of 7.8%, so we won’t completely dismiss the company. But Evonik Industries saw a five year net income decline of 26% over the past five years. Bear in mind, the company does have a slightly low ROE. So that’s what might be causing earnings growth to shrink.

As a next step, we compared Evonik Industries’ performance with the industry and found thatEvonik Industries’ performance is depressing even when compared with the industry, which has shrunk its earnings at a rate of 2.4% in the same period, which is a slower than the company.

Story Continues  

XTRA:EVK Past Earnings Growth February 16th 2026

Earnings growth is an important metric to consider when valuing a stock. 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. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Evonik Industries is trading on a high P/E or a low P/E, relative to its industry.

Is Evonik Industries Making Efficient Use Of Its Profits?

With a three-year median payout ratio as high as 101%,Evonik Industries’ shrinking earnings don’t come as a surprise as the company is paying a dividend which is beyond its means. Paying a dividend beyond their means is usually not viable over the long term. You can see the 2 risks we have identified for Evonik Industries by visiting our risks dashboard for free on our platform here.

Moreover, Evonik Industries has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Existing analyst estimates suggest that the company’s future payout ratio is expected to drop to 60% over the next three years. However, the company’s ROE is not expected to change by much despite the lower expected payout ratio.

Summary

In total, we would have a hard think before deciding on any investment action concerning Evonik Industries. The low ROE, combined with the fact that the company is paying out almost if not all, of its profits as dividends, has resulted in the lack or absence of growth in its earnings. With that said, we studied current analyst estimates and discovered that analysts expect the company’s earnings growth to improve slightly. The company’s existing shareholders might have some respite after all. Are these analysts expectations based on the broad expectations for the industry, or on the company’s fundamentals? Click here to be taken to our analyst’s forecasts page for the company.

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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