Investment Potential And The Effects Of Financial Ratios On Stock Return In Mining Sector of Sharia And Pro- Environment Stock Group

Abstract

Investment is the act of investing or laying out capital in an enterprise with the expectation of return. One of interesting investments is in mining company which is expected to give high return in relatively short time. Before investors choose the stocks, they need to look at and analyze the company’s financial performance to reduce the investment risk. Therefore, the purpose of this study is to examine the investment potential and analyze the impact of financial ratios (CR, DER, EPS, ROE, TATO, ROA, PER and NPM) on stock return in mining sector. The object of this research is mining companies who was listed on index SRI-Kehati and Jakarta Islamic Index (JII) period 2010 until 2013 consistently. The method used is descriptive analysis to calculate Tobin 's Q score to look at potential investments. Panel data regression analysis to see the effect of financial ratios to stock return. Research result shows that SRI-Kehati index and JII have high investment potential from 2010 to 2013. Mining companies from SRI-Kehati index, PTBA, and ENRG from JII are listed on the category of high investment potential. This is because the companies Tobin’s Q score are greater than 1 for four consecutive years. While the effect of financial ratios (EPS and ROA) on SRI-Kehati index and JII have positive and significant effects on stocks return.