Effect of Profitability on the Stock Price of Luxury Goods Retail Companies in the Retailing Industry from Stock Market in Saudi Arabia
DOI:
https://doi.org/10.59992/IJSR.2024.v3n3p2الكلمات المفتاحية:
Financial Analysis، Financial Ratios، Stock Price، Profitability، ROA، ROE، NPMالملخص
The purpose of this study is to analyze profitability by using the return on assets, return on equity and a net profit margin and know their effect on the stock price in order to know the relationship between profitability and the stock price. This study uses secondary data. The sample used are six luxury goods retailers companies in the retail industry from Stock Market in Saudi Arabia for the period from 2015 to 2019. Samples in this study were taken using purposive sampling technique. The data was collected from the index of the stock market in KSA (The Tadawul All Share Index "TASI"). Independent variables in this study are the return on assets (ROA), the return on equity (ROE) and the net profit margin (NPM). The dependent variable is the stock price (SP). Multiple linear regression analysis was used to test hypotheses in this study. EViews program was used to calculate the multiple linear regression. It has been confirmed that the data is suitable for conducting a multiple linear regression analysis, and this was done by test the unit root by using ADF and PP techniques on the time series of this study, and examining multicollinearity test, heteroscedasticity test and normality test. The results of the multiple linear regression analysis showed that the (ROA) partially has a significant positive effect on the stock price, and that the (ROE) partially has a positive but not significant effect on the stock price, and that the (NPM) partially has a significant negative effect on the stock price, and that the three profitability variables combined have a significant positive effect at the same time on the stock price. The study recommends relying on profitability when evaluating the stock price, because the results of this study as well as the results of similar studies showed that the profitability have a significant effect on the stock price.
المراجع
- Alaagam, A. (2019). The Relationship Between Profitability and Stock Prices - Evidence from the Saudi Banking Sector. Research Journal of Finance and Accounting, Vol.10, No.14.
- Alfiyah, F. and Lubis, I. (2021). Effect of Return on Equity and Debt to Equity Ratio to Stock Return. Indonesian Financial Review, Vol.1, No.1.
- Anderson, Sweeney and Williams. (2011). Statistics for Business and Economics. China: South-Western.
- Asiri, B. and Alzeera, H. (2013). Is the Saudi Stock Market Efficient? A Case of Weak-Form Efficiency. Research Journal of Finance and Accounting, Vol.4, No.6.
- Bayrakdaroglu, A. Mirgen, C. and Kuyu, E. (2017). Relationship between profitability ratios and stock prices: an empirical analysis on BIST-100. PressAcademia Procedia (PAP), Vol.6.
- Besley, S. and Brigham, E. (2007). Essentials of managerial finance: Cengage learning.
- Brigham and Houston, (2018). Essentials of Financial Management. Translation Novietha and Febriany. Edis 14 Book 1. Cengage Learning, Jakarta: Publisher of Salemba Empat.
- Cherif, M. and Gazdar, K. (2010). Macroeconomic and institutional determinants of stock market development. The International Journal of Banking and Finance, Vol.7, No.1.
- Edison, A. (2016). Regression and Path Analysis with SPSS pathways. Second edition. Bandung: Sun.
- Expert Market Research (EMR). (2021). Saudi Arabia Luxury Market: Historical Market and Forecast (2017-2027); Market Dynamics; Value Chain Analysis; Competitive Landscape; Industry Events and Developments.
- Ghozali, Imam. (2006) & (2011). Application of Multivariate Analysis with SPSS Program. Semarang: Diponegoro University Publishing Agency.
- Gitman, L., Joehnnk, M., & Smart, S. (2011). Fundamentals of Investing. Australia: Pearson.
- Hashim, S. and Shahrumzaki, N. (2020). The Impact of Profitability, Leverage and Dividend on the Share Price of Food and Beverage Sector in Malaysia. Global Business and Management Research: An International Journal, Vol.12, No.4.
- Hidayat, R. Roespinoedji, D. and Haizam, M. (2021). Effect of Return On Assets, Net Profit Margin and Earning Per Share on Stock Prices. Turkish Journal of Computer and Mathematics Education (TURCOMAT), Vol.12, No.8.
- Horngren, C., Harrison, W., & Oliver, M. (2009). Accounting. Upper Saddle River, NJ: Pearson.
- Humiang, G., P. (2012) The Influence of Return on Equity (ROE), Return on Assets (ROA), Earnings per Share (EPS) to Stock Return. Thesis (unpublished), Sam Ratulangi University.
- Hutami, R. Putri. (2012). The Effect of Dividend Per Share, Return On Equity and Net Profit Margin on Stock Prices of Manufacturing Industry Companies Listed on the Indonesia Stock Exchange for the Period 2006-2010. ISSN 2303-2065. Nominal Journal, Vol.1, No,1.
- Islahuzzaman, Mardiana, D. and Afdal, D. (2021). Profitability Ratio Influence Over Stock Price in Agricultural Companies Listed On the Indonesia Stock Exchange in 2015 - 2019. Review of International Geographical Education (RIGEO), Vol.11, No.3.
- Kasmir. (2012) & (2017). Financial Statement Analysis (Analisis Laporan Keuangan). Jakarta: PT. Rajagrafindo Persada.
- Keef, S. and Roush, M. (2001). Residual Income: A Review Essay. Australian Accounting Review, Vol.11, No.1.
- Kusumawati. (2016).” Effect of Profitability, Dividend policy and Systematic Risk on stock price. Study on Manufacturing Companies Listing in IDX Period 2012-2014”. Journal of Business Administration (JAB), Vol.35, No.2.
- Murniati, S. (2016). Effect of Capital Structure, Company Size and Profitability on the Stock Price of Food and Beverage Companies Listed on the Indonesia Stock Exchange. Information Management and Business Review, Vol.8, No.1.
- Nadyayani, D. and Suarjaya, A. (2021). The effect of profitability on stock return. American Journal of Humanities and Social Sciences Research (AJHSSR), Vol.5, No.1.
- Pradhan, R (2017). Impact of Fundamental Factors on Stock Price: A Case of Nepalese Commercial Banks
- Purnomo, H. (2008). Effect of Financial Performance Share Price Corporate Banking In BEI. Semarang University.
- Rafaqat, S. Rafaqat, S. Rafaqat, S. & Rafaqat, D. (2021). The Impact of Fundamental Factors on the Share Price of Micro-Sized Nasdaq Listed Technology Companies. The Economics and Finance Letters, Vol.8, No.2.
- Rafiq, H. Fatima, T. Sohail, M. Saleem, M. and Khan, M. (2013). Parental Involvement and Academic Achievement; A Study on Secondary School Students of Lahore, Pakistan. International Journal of Humanities and Social Science, Vol.3, No.8.
- RAZDAR, M. and ANSARI, M. (2013). A Study of Stock Price and Profitability Ratios in TEHRAN Stock Exchange.
- Reily, F., and Brown, K. (2012). Analysis of Investments & Managements of Portfolios. Canada: South-Western, Cengage Learning.
- Shawer, M. and Al-Ajlouni, A. (2018). Impact of Profitability on Stock Market Value: Evidence from Petrochemical Industry in Saudi Arabia. Journal of Administrative and Economic Sciences, Qassim University, Vol.11, No.2.
- Sheridan. (2021). Saudi Arabia Luxury Market Growth Rate, Industry Share, Size, Forecast Report 2021-2026. According to the latest report by IMARC Group. Alabama, United States.
- Suad, H. (2008). Basics Portfolio Theory and Analysis Securities. Fourth Edition. Publisher: STIM YKPN. Yogyakarta.
- Sugiyono. (2010). Business Research Methods (Quantitative, Qualitative and R&D Approaches). Bandung: CV. Alphabet.
- Sunaryo, D. (2020). The Effect of Net Profit Margin, Return on Asset, Return on Equity on Share Prices in The Southeast Asian Metal Industry. International Journal of Science, Technology & Management, Vol.1, No.3.
- Sutrisno. (2001). Financial Management Theory, Concepts and Applications, First Edition, Ekonisia, Yogyakarta.
- Sutrisno, (2012). Financial Management Theory, Concepts and Applications. Ekonisia, Yogyakarta.
- Syamsuddin, L. (2009). Corporate Financial Management. New edition. Jakarta: PT. King Grafindo Persada.
- Tease, W. (1993). The stock market and investment. OECD Economic Studies, Vol.20, No.2.
- Wartoyo, H. and Nurhayati. (2018). Analysis of The Effect of Net Profit Margin, Return on Assets, and Return on Equity on Stock Price (Case Study on Consumption Industrial Sector Companies Listed in Indonesian Sharia Stock Index at Indonesia Stock Exchange in 2016). The Management Journal of BINANIAGA, Vol.3, No.2.
- Concerning the stock price, the data for the stock prices for this study were collected from the website: investing.com.
- The companies' financial statements (statement of financial position and income statement) were used to calculate ROA, ROE and NPM.
