Factors that Influence Stock Returns with Earnings Per Share as Moderating Variables in Consumer Goods Companies on the Indonesia Stock Exchange

Oct 13, 2025 by wbrum.org 43 views

Factors that Influence Stock Returns with Earnings Per Share as Moderating Variables in Consumer Goods Companies on the Indonesia Stock Exchange

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a wide range of companies listed across various sectors. Consumer goods companies are among the most popular and widely traded stocks on the IDX, with many investors seeking to capitalize on their growth potential. However, understanding the factors that influence stock returns in these companies is crucial for making informed investment decisions. This study aims to investigate the various factors that affect stock returns in consumer goods companies listed on the IDX, with a particular focus on the moderating role of Earnings Per Share (EPS).

Literature Review

Previous studies have identified several factors that influence stock returns in consumer goods companies, including operating cash flow, investment cash flow, funding cash flow, net cash flow, gross profit, company size, debt to equity ratio, net profit margin, market value to book value, economic value added, market share, and return on asset (ROA). However, the role of EPS as a moderating variable has not been extensively explored in the context of consumer goods companies. This study seeks to fill this knowledge gap by examining the moderating effect of EPS on the relationship between these factors and stock returns.

Methodology

The population used in this study consisted of 40 consumer goods companies listed on the IDX during the 2007-2011 period. A purposive sampling method was employed to select 22 companies as a sample. Data was collected through the documentation of financial statements from the IDX and processed using the Kaiser-Meyer-Olkin (KMO) test method and multiple linear regression with the help of the SPSS program.

Results

The results of this study showed that simultaneously, operating cash flow, funding cash flow, gross profit, company size, debt to equity ratio, net profit margin, market value to book value, economic value added, and return on assets affect stock returns. However, partially, only operating cash flows, gross profit, and return on assets are proven to affect stock returns.

When EPS was used as a moderating variable in the second analysis, the results showed that EPS has no significant influence on stock returns. This means that EPS does not strengthen the relationship between variables tested with stock returns, indicating that EPS is not a moderating variable in the context of this research.

In-Depth Analysis

The results of this study provide important insights for investors and stakeholders in the capital market, especially in the context of consumer goods companies. The influence of factors such as operating cash flows and gross profit on stock returns shows that the company's financial performance, which is reflected in the financial statements, is very relevant to be aware of. Investors should pay attention to the operational performance and efficiency of the company in generating profits, because both can be a strong indicator to predict the potential return to be received.

Meanwhile, the not significant role of EPS as a moderating variable indicates the need for a deeper understanding of how company performance can influence investment decisions. Although EPS is often a popular measure to evaluate profitability, these results indicate that other factors are more basic, such as cash flow and financial structure, may be more important in determining stock returns.

Conclusion

Overall, this research emphasizes the importance of comprehensive analysis of various factors that affect stock returns. Investors who want to improve investment decisions need to consider more than just EPS numbers and see how the entire financial context of the company can have an impact on the potential return on the market. Further research can expand this understanding by exploring other variables that may affect in a broader context and test models with larger datasets.

Recommendations

Based on the findings of this study, the following recommendations are made:

Investors should pay attention to the operational performance and efficiency of the company in generating profits, as this can be a strong indicator to predict the potential return to be received.
The use of EPS as a moderating variable should be re-examined in future studies, as the results of this study suggest that it may not be a significant factor in determining stock returns.
Further research should be conducted to explore other variables that may affect stock returns in consumer goods companies, such as market trends, industry conditions, and regulatory changes.
Investors should consider a comprehensive analysis of various factors that affect stock returns, rather than relying solely on EPS numbers.

Limitations

This study has several limitations that should be noted. Firstly, the sample size was limited to 22 companies, which may not be representative of the entire population of consumer goods companies listed on the IDX. Secondly, the study only examined the moderating effect of EPS on the relationship between various factors and stock returns, and did not explore other potential moderating variables. Finally, the study only analyzed data from the 2007-2011 period, and did not consider more recent data.

Future Research Directions

Future research should aim to expand the understanding of the factors that influence stock returns in consumer goods companies. Some potential research directions include:

Exploring the moderating effect of other variables, such as market trends, industry conditions, and regulatory changes.
Analyzing data from a larger sample size and a more recent period.
Examining the relationship between stock returns and other financial metrics, such as dividend yield and price-to-earnings ratio.
Investigating the impact of macroeconomic factors, such as inflation and interest rates, on stock returns in consumer goods companies.

By addressing these research gaps and limitations, future studies can provide a more comprehensive understanding of the factors that influence stock returns in consumer goods companies, and help investors make more informed investment decisions.
Q&A: Factors that Influence Stock Returns with Earnings Per Share as Moderating Variables in Consumer Goods Companies on the Indonesia Stock Exchange

Q: What are the main factors that influence stock returns in consumer goods companies?

A: The main factors that influence stock returns in consumer goods companies include operating cash flow, funding cash flow, gross profit, company size, debt to equity ratio, net profit margin, market value to book value, economic value added, and return on assets.

Q: Why is Earnings Per Share (EPS) not a significant factor in determining stock returns?

A: The results of this study show that EPS does not strengthen the relationship between variables tested with stock returns, indicating that EPS is not a moderating variable in the context of this research. This means that investors should not rely solely on EPS numbers when making investment decisions.

Q: What are the implications of this study for investors?

A: The study's findings suggest that investors should pay attention to the operational performance and efficiency of the company in generating profits, as this can be a strong indicator to predict the potential return to be received. Investors should also consider a comprehensive analysis of various factors that affect stock returns, rather than relying solely on EPS numbers.

Q: What are the limitations of this study?

A: The study has several limitations, including a limited sample size of 22 companies, which may not be representative of the entire population of consumer goods companies listed on the IDX. The study also only examined the moderating effect of EPS on the relationship between various factors and stock returns, and did not explore other potential moderating variables.

Q: What are the future research directions for this study?

A: Future research should aim to expand the understanding of the factors that influence stock returns in consumer goods companies. Some potential research directions include:

Exploring the moderating effect of other variables, such as market trends, industry conditions, and regulatory changes.
Analyzing data from a larger sample size and a more recent period.
Examining the relationship between stock returns and other financial metrics, such as dividend yield and price-to-earnings ratio.
Investigating the impact of macroeconomic factors, such as inflation and interest rates, on stock returns in consumer goods companies.

Q: What are the practical implications of this study for investors and stakeholders in the capital market?

A: The study's findings have practical implications for investors and stakeholders in the capital market, particularly in the context of consumer goods companies. Investors should consider a comprehensive analysis of various factors that affect stock returns, rather than relying solely on EPS numbers. Stakeholders should also be aware of the importance of operational performance and efficiency in generating profits, as this can be a strong indicator to predict the potential return to be received.

Q: How can investors use the findings of this study to make more informed investment decisions?

A: Investors can use the findings of this study to make more informed investment decisions by considering a comprehensive analysis of various factors that affect stock returns, rather than relying solely on EPS numbers. Investors should also pay attention to the operational performance and efficiency of the company in generating profits, as this can be a strong indicator to predict the potential return to be received.

Q: What are the potential risks and challenges associated with this study?

A: The study's findings may be subject to various risks and challenges, including the potential for biases in the sample selection process, the limitations of the data used, and the potential for changes in market conditions that may affect the study's findings. Investors and stakeholders should be aware of these potential risks and challenges when interpreting the study's findings.