HIVE Digital Technologies (CVE:HIVE) has had a great run on the share market with its stock up by a significant 121% over the last three months. However, we decided to pay attention to the company’s fundamentals which don’t appear to give a clear sign about the company’s financial health. In this article, we decided to focus on HIVE Digital Technologies’ ROE.
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. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for HIVE Digital Technologies is:
9.0% = US$50m ÷ US$561m (Based on the trailing twelve months to June 2025).
The ‘return’ is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each CA$1 of shareholders’ capital it has, the company made CA$0.09 in profit.
We have already established that ROE serves as an efficient profit-generating gauge for a company’s future earnings. 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. 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.
On the face of it, HIVE Digital Technologies’ ROE is not much to talk about. However, given that the company’s ROE is similar to the average industry ROE of 11%, we may spare it some thought. Having said that, HIVE Digital Technologies’ five year net income decline rate was 8.1%. Bear in mind, the company does have a slightly low ROE. Hence, this goes some way in explaining the shrinking earnings.
However, when we compared HIVE Digital Technologies’ growth with the industry we found that while the company’s earnings have been shrinking, the industry has seen an earnings growth of 21% in the same period. This is quite worrisome.
TSXV:HIVE Past Earnings Growth September 18th 2025
Earnings growth is an important metric to consider when valuing a stock. It’s important for an investor to know whether the market has priced in the company’s expected earnings growth (or decline). Doing so will help them establish if the stock’s future looks promising or ominous. Is HIVE Digital Technologies fairly valued compared to other companies? These 3 valuation measures might help you decide.
HIVE Digital Technologies doesn’t pay any regular dividends, meaning that the company is keeping all of its profits, which makes us wonder why it is retaining its earnings if it can’t use them to grow its business. So there could be some other explanations in that regard. For instance, the company’s business may be deteriorating.
Overall, we have mixed feelings about HIVE Digital Technologies. While the company does have a high rate of profit retention, its low rate of return is probably hampering its earnings growth. With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future. 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.
