Is Sanlam Limited’s (JSE:SLM) Recent Performance Tethered To Its Attractive Financial Prospects?

Simply Wall St

Fri, February 13, 2026 at 1:54 PM GMT+9 4 min read

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Most readers would already know that Sanlam’s (JSE:SLM) stock increased by 8.0% over the past three months. Given its impressive performance, we decided to study the company’s key financial indicators as a company’s long-term fundamentals usually dictate market outcomes. Specifically, we decided to study Sanlam’s ROE in this article.

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

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How Do You Calculate Return On Equity?

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 Sanlam is:

20% = R22b ÷ R109b (Based on the trailing twelve months to June 2025).

The ‘return’ is the amount earned after tax over the last twelve months. So, this means that for every ZAR1 of its shareholder’s investments, the company generates a profit of ZAR0.20.

See our latest analysis for Sanlam

What Has ROE Got To Do With 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. 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.

A Side By Side comparison of Sanlam’s Earnings Growth And 20% ROE

To begin with, Sanlam seems to have a respectable ROE. Even when compared to the industry average of 19% the company’s ROE looks quite decent. This certainly adds some context to Sanlam’s exceptional 34% net income growth seen over the past five years. We believe that there might also be other aspects that are positively influencing the company’s earnings 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.

We then performed a comparison between Sanlam’s net income growth with the industry, which revealed that the company’s growth is similar to the average industry growth of 33% in the same 5-year period.

JSE:SLM Past Earnings Growth February 13th 2026

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 Sanlam fairly valued compared to other companies? These 3 valuation measures might help you decide.

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Is Sanlam Making Efficient Use Of Its Profits?

Sanlam’s significant three-year median payout ratio of 63% (where it is retaining only 37% of its income) suggests that the company has been able to achieve a high growth in earnings despite returning most of its income to shareholders.

Besides, Sanlam has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Based on the latest analysts’ estimates, we found that the company’s future payout ratio over the next three years is expected to hold steady at 54%. Accordingly, forecasts suggest that Sanlam’s future ROE will be 18% which is again, similar to the current ROE.

Summary

In total, we are pretty happy with Sanlam’s performance. Especially the high ROE, Which has contributed to the impressive growth seen in earnings. Despite the company reinvesting only a small portion of its profits, it still has managed to grow its earnings so that is appreciable. 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 company’s future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more.

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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