The Effect of Profitability on Return of Banking Companies in Indonesia Stock Exchange

ABSTRACT: The main objective of investors to invest in company shares is to maximize their wealth to be achieved through stock returns. This study aims to determine the effect of Net Profit Margin (NPM), Return on Assets (ROA), and Return On Equity (ROE) on stock returns. This research was conducted at banking companies on the Indonesia Stock Exchange (IDX) for the 2015-2018 period. The total population of 37 companies with a purposive sampling sample determination method obtained a sample of 26 companies. Data collection methods used are non-participant observation methods with multiple linear regression data analysis techniques. Based on the results of the analysis it was found that NPM and ROA had a significant positive effect on stock returns, while ROE had no significant positive effect on stock returns. Investors and interested parties are expected to pay attention to changes in NPM and ROA because they have an influence on stock returns, to make investment decisions.
KEYWORDS: investment, stock returns, NPM, ROA, ROE