Determining Stock Performance Using Financial Indicators: Insights from Sharia Growth Index (2022-2024) Fauziah Roshafara, Fitri Amanah, Nafa Nurhanifah, Novianda Dwi Tanti Ramdani
Universitas Islam Bandung
Abstract
The growing interest in Sharia investments has attracted more attention from both researchers and practitioners. Investors usually look at financial indicators, to evaluate the performance and return prospects of Sharia-compliant stocks. However, studies show mixed results on how these indicators affect stock returns. This study aims to analyze the effect of several financial indicators, namely Earnings per Share (EPS), Price to Earnings Ratio (PER), Return on Equity (ROE), Debt to Equity Ratio (DER) and Net Profit Margin (NPM) on stock performance based on returns in Sharia Growth Index companies for the 2022-2024 period. The data in this study are derived from secondary financial reports that meet the specified criteria. The technique used in the analysis was panel data regression. The coefficient of determination shows that 71% of the variation in returns can be explained by NPM, EPS, PER, ROE, and DER in the fixed effect model. Those five indicators have proven to influence the returns simultaneously. Individually, only three of the five independent variables had a significant effect on the stock returns of the Sharia Growth Index. PER and ROE predict stock returns in a positive direction. On the contrary, NPM influences the negative direction of stock returns. Meanwhile, EPS and DER do not affect stock returns.
Keywords: Sharia Investments, Financial Indicators, Stock Returns, Panel Data Regression
