To find a multi-bagger stock, what are the underlying trends we should look for in a business? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after investigating Road Environment Technology.Ltd (SHSE:688156), we don't think it's current trends fit the mold of a multi-bagger.
Understanding Return On Capital Employed (ROCE)
Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Road Environment Technology.Ltd, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.089 = CN¥73m ÷ (CN¥1.0b - CN¥183m) (Based on the trailing twelve months to June 2022).
Thus, Road Environment Technology.Ltd has an ROCE of 8.9%. On its own that's a low return, but compared to the average of 6.7% generated by the Commercial Services industry, it's much better.
View our latest analysis for Road Environment Technology.Ltd
SHSE:688156 Return on Capital Employed August 23rd 2022
In the above chart we have measured Road Environment Technology.Ltd's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Road Environment Technology.Ltd here for free.
The Trend Of ROCE
We weren't thrilled with the trend because Road Environment Technology.Ltd's ROCE has reduced by 49% over the last five years, while the business employed 232% more capital. That being said, Road Environment Technology.Ltd raised some capital prior to their latest results being released, so that could partly explain the increase in capital employed. Road Environment Technology.Ltd probably hasn't received a full year of earnings yet from the new funds it raised, so these figures should be taken with a grain of salt. It's also worth noting the company's latest EBIT figure is within 10% of the previous year, so it's fair to assign the ROCE drop largely to the capital raise.
On a side note, Road Environment Technology.Ltd has done well to pay down its current liabilities to 18% of total assets. So we could link some of this to the decrease in ROCE. Effectively this means their suppliers or short-term creditors are funding less of the business, which reduces some elements of risk. Some would claim this reduces the business' efficiency at generating ROCE since it is now funding more of the operations with its own money.
The Bottom Line On Road Environment Technology.Ltd's ROCE
While returns have fallen for Road Environment Technology.Ltd in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. And the stock has followed suit returning a meaningful 34% to shareholders over the last year. So while investors seem to be recognizing these promising trends, we would look further into this stock to make sure the other metrics justify the positive view.
Road Environment Technology.Ltd does come with some risks though, we found 3 warning signs in our investment analysis, and 1 of those can't be ignored...
While Road Environment Technology.Ltd may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
要找到一只多袋股票,我们应该在一家企业中寻找什么潜在趋势?一种常见的方法是尝试找到一家拥有退货已使用资本(ROCE)正在增加,同时也在增长金额已动用资本的比例。基本上,这意味着一家公司有盈利的举措,可以继续进行再投资,这是复合机器的一个特点。不过,经过调查,路政环境科技有限公司(上海证券交易所:688156),我们认为目前的趋势不符合多袋子模式。
了解资本回报率(ROCE)
如果您不确定,只需澄清一下,ROCE是一种评估公司投资于其业务的资本获得多少税前收入(按百分比计算)的指标。要计算道路环境技术有限公司的此指标,请使用以下公式:
已动用资本回报率=息税前收益(EBIT)?(总资产-流动负债)
0.089=7300万元×(10亿元-1.83亿元)(根据截至2022年6月的往绩12个月计算).
因此,道路环境技术有限公司的净资产收益率为8.9%。就其本身而言,这是一个很低的回报率,但与商业服务业6.7%的平均回报率相比,这要好得多。
查看我们对道路环境技术有限公司的最新分析
上证所:2022年8月23日资本回报率688156
在上面的图表中,我们衡量了道路环境技术有限公司先前的ROCE与其先前的表现,但可以说,未来更重要。如果你愿意,你可以在这里查看涵盖道路环境技术有限公司的分析师的预测免费的。
ROCE的发展趋势
我们对这一趋势并不感到兴奋,因为道路环境技术有限公司的净资产收益率在过去五年中下降了49%,而该业务雇佣的资本增加了232%。话虽如此,道路环境技术有限公司在发布最新业绩之前筹集了一些资本,因此这可以在一定程度上解释已动用资本的增加。道路环境技术有限公司可能还没有从它筹集的新资金中获得全年的收益,所以对这些数字应该持保留态度。同样值得注意的是,该公司最新的息税前利润数字与上一年相比不到10%,因此将净资产收益率下降主要归因于融资是公平的。
另外,道路环境技术有限公司在将目前的负债降低到总资产的18%方面做得很好。因此,我们可以将其中一些因素与净资产收益率的下降联系起来。实际上,这意味着它们的供应商或短期债权人减少了对业务的融资,这降低了一些风险因素。一些人会说,这降低了企业产生净资产收益率的效率,因为它现在用自己的钱为更多的运营提供资金。
道路环境技术有限公司的ROCE底线
虽然最近道路环境技术有限公司的回报率有所下降,但我们看到销售额在增长,该业务正在对其业务进行再投资,这让我们感到鼓舞。过去一年,该股也向股东返还了34%的可观回报。因此,尽管投资者似乎正在认识到这些充满希望的趋势,但我们会进一步研究这只股票,以确保其他指标证明这种积极观点是合理的。
然而,我们发现,道路环境技术有限公司确实存在一些风险在我们的投资分析中出现了3个警告信号,其中有一个是不容忽视的。
虽然道路环境技术有限公司目前可能没有获得最高的回报,但我们已经编制了一份目前股本回报率超过25%的公司名单。看看这个免费在这里列出。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。