Declining Stock and Decent Financials: Is The Market Wrong About Next 15 Group plc (LON:NFG)?

Simply Wall St

Mon, February 16, 2026 at 2:05 PM GMT+9 4 min read

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It is hard to get excited after looking at Next 15 Group’s (LON:NFG) recent performance, when its stock has declined 15% over the past month. However, stock prices are usually driven by a company’s financials over the long term, which in this case look pretty respectable. Specifically, we decided to study Next 15 Group’s ROE in this article.

Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company’s success at turning shareholder investments into profits.

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How Is ROE Calculated?

The formula for ROE is:

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

So, based on the above formula, the ROE for Next 15 Group is:

10.0% = UK£16m ÷ UK£164m (Based on the trailing twelve months to July 2025).

The ‘return’ is the amount earned after tax over the last twelve months. That means that for every £1 worth of shareholders’ equity, the company generated £0.10 in profit.

View our latest analysis for Next 15 Group

What Is The Relationship Between ROE And Earnings Growth?

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 “retains” 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.

Next 15 Group’s Earnings Growth And 10.0% ROE

On the face of it, Next 15 Group’s ROE is not much to talk about. However, given that the company’s ROE is similar to the average industry ROE of 10%, we may spare it some thought. Particularly, the exceptional 49% net income growth seen by Next 15 Group over the past five years is pretty remarkable. Given the slightly low ROE, it is likely that there could be some other aspects that are driving this growth. For example, it is possible that the company’s management has made some good strategic decisions, or that the company has a low payout ratio.

As a next step, we compared Next 15 Group’s net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 40%.

AIM:NFG 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. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Next 15 Group fairly valued compared to other companies? These 3 valuation measures might help you decide.

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Is Next 15 Group Efficiently Re-investing Its Profits?

The three-year median payout ratio for Next 15 Group is 38%, which is moderately low. The company is retaining the remaining 62%. This suggests that its dividend is well covered, and given the high growth we discussed above, it looks like Next 15 Group is reinvesting its earnings efficiently.

Additionally, Next 15 Group has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Upon studying the latest analysts’ consensus data, we found that the company is expected to keep paying out approximately 36% of its profits over the next three years. Still, forecasts suggest that Next 15 Group’s future ROE will rise to 15% even though the the company’s payout ratio is not expected to change by much.

Conclusion

On the whole, we do feel that Next 15 Group has some positive attributes. With a high rate of reinvestment, albeit at a low ROE, the company has managed to see a considerable growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company’s earnings growth is expected to slow down. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts 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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