--- title: "Does The Market Have A Low Tolerance For Davis Commodities Limited's (NASDAQ:DTCK) Mixed Fundamentals?" description: "Davis Commodities Limited (NASDAQ:DTCK) has seen its stock decline by 15% over the past three months, raising concerns about its mixed fundamentals. The company's return on equity (ROE) stands at a lo" type: "news" locale: "en" url: "https://longbridge.com/en/news/234073396.md" published_at: "2025-04-01T13:51:29.000Z" --- # Does The Market Have A Low Tolerance For Davis Commodities Limited's (NASDAQ:DTCK) Mixed Fundamentals? > Davis Commodities Limited (NASDAQ:DTCK) has seen its stock decline by 15% over the past three months, raising concerns about its mixed fundamentals. The company's return on equity (ROE) stands at a low 4.0%, significantly below the industry average of 15%, and its net income has decreased by 16% over the last five years. Despite retaining profits for reinvestment, the lack of earnings growth suggests potential underlying issues. Investors are advised to approach with caution and consider the company's risk profile before trading. With its stock down 15% over the past three months, it is easy to disregard Davis Commodities (NASDAQ:DTCK). It seems that the market might have completely ignored the positive aspects of the company's fundamentals and decided to weigh-in more on the negative aspects. 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. Specifically, we decided to study Davis Commodities' ROE in this article. Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Simply put, it is used to assess the profitability of a company in relation to its equity capital. ## 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 Davis Commodities is: 4.0% = US$469k ÷ US$12m (Based on the trailing twelve months to June 2024). The 'return' is the yearly profit. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.04 in profit. See our latest analysis for Davis Commodities ## What Is The Relationship Between ROE And Earnings Growth? Thus far, we have learned that ROE measures how efficiently a company is generating its profits. 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. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. ## Davis Commodities' Earnings Growth And 4.0% ROE It is hard to argue that Davis Commodities' ROE is much good in and of itself. Even compared to the average industry ROE of 15%, the company's ROE is quite dismal. Given the circumstances, the significant decline in net income by 16% seen by Davis Commodities over the last five years is not surprising. We reckon that there could also be other factors at play here. For instance, the company has a very high payout ratio, or is faced with competitive pressures. That being said, we compared Davis Commodities' 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 11% in the same 5-year period. 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. Doing so will help them establish if the stock's future looks promising or ominous. Is Davis Commodities fairly valued compared to other companies? These 3 valuation measures might help you decide. ## Is Davis Commodities Efficiently Re-investing Its Profits? Davis Commodities doesn't pay any regular dividends, meaning that potentially all of its profits are being reinvested in the business, which doesn't explain why the company's earnings have shrunk if it is retaining all of its profits. It looks like there might be some other reasons to explain the lack in that respect. For example, the business could be in decline. ## Conclusion On the whole, we feel that the performance shown by Davis Commodities can be open to many interpretations. 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. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. You can see the 3 risks we have identified for Davis Commodities by visiting our **risks dashboard** for free on our platform here. If you're looking to trade Davis Commodities, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers. With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account. Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer. Sponsored Content ### Related Stocks - [DTCK.US - Davis Commodities](https://longbridge.com/en/quote/DTCK.US.md) ## Related News & Research | Title | Description | URL | |-------|-------------|-----| | Davis Commodities Issues Amendment to June 2025 SEC Filing | Davis Commodities Ltd. has amended its June 2025 Form 6-K report, clarifying that the original filing's information is i | [Link](https://longbridge.com/en/news/272413733.md) | | Davis Commodities Issues Amendment to Annual Financial Report | Davis Commodities Ltd. has amended its annual financial report on Form 6-K, providing updated corporate information and | [Link](https://longbridge.com/en/news/272413593.md) | | Top Eversource Energy Insiders Quietly Cash Out in Major Stock Moves | Eversource Energy (ES) experienced significant insider selling on February 20, 2026, with Trustee John Y Kim selling 6,0 | [Link](https://longbridge.com/en/news/276501481.md) | | Top Westinghouse Executive Makes Notable Move With Company Stock | Westinghouse Air Brake Technologies (WAB) EVP Gregory Sbrocco sold 952 shares valued at $246,025 on February 20, 2026. F | [Link](https://longbridge.com/en/news/276501280.md) | | Exelixis Director Jack L Wyszomierski Sells 99,574 Shares | Jack L Wyszomierski, a Director at Exelixis, sold 99,574 shares of Common Stock on February 18, 2026, for a total of $4, | [Link](https://longbridge.com/en/news/276499134.md) | --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.