Sharia Banking Stocks: The Role of Profitability and Financial Performance

The increasing awareness among Muslims to adhere to Sharia principles in their daily lives has contributed to a rise in investment in Sharia-compliant stocks, particularly within the Sharia banking sector. This sector, which aligns with Islamic principles, offers potential investment opportunities that can be evaluated by analyzing key financial metrics such as profitability and financial performance, derived from company financial reports. This research aims to examine the impact of four financial indicators—Return on Assets (ROA), Return on Equity (ROE), Earnings Per Share (EPS), and Price Earnings Ratio (PER)—on the stock prices of Sharia banks listed on the Indonesia Stock Exchange (IDX) from 2019 to 2023. Using a quantitative research approach, the study employs the SPSS version 29 data processing application, utilizing 60 data points from three Sharia banking companies: PNBS, BRIS, and BTPS. The results of the data analysis reveal that Return on Assets (ROA) has a significant positive effect on stock prices, indicating that higher asset returns are associated with higher stock values. Similarly, Earnings Per Share (EPS) also shows a significant positive impact on stock prices, suggesting that increased earnings per share contribute to the appreciation of stock values. On the other hand, Return on Equity (ROE) and Price Earnings Ratio (PER) were found to have no significant effect on stock prices in the context of this study. These findings provide insights into the financial indicators that influence stock prices in the Sharia banking sector, offering valuable information for investors and financial analysts.