What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. However, after investigating Holley (NYSE:HLLY), we don't think it's current trends fit the mold of a multi-bagger.
Return On Capital Employed (ROCE): What Is It?
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. The formula for this calculation on Holley is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.082 = US$95m ÷ (US$1.3b - US$96m) (Based on the trailing twelve months to October 2022).
Therefore, Holley has an ROCE of 8.2%. Ultimately, that's a low return and it under-performs the Auto Components industry average of 13%.
Check out our latest analysis for Holley
NYSE:HLLY Return on Capital Employed December 16th 2022
In the above chart we have measured Holley's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.
How Are Returns Trending?
There are better returns on capital out there than what we're seeing at Holley. The company has employed 24% more capital in the last two years, and the returns on that capital have remained stable at 8.2%. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.
What We Can Learn From Holley's ROCE
In conclusion, Holley has been investing more capital into the business, but returns on that capital haven't increased. It seems that investors have little hope of these trends getting any better and that may have partly contributed to the stock collapsing 81% in the last year. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.
One final note, you should learn about the 3 warning signs we've spotted with Holley (including 1 which doesn't sit too well with us) .
While Holley isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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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.
我们应该寻找哪些早期趋势来识别一只可能在长期内成倍增值的股票?在其他方面,我们希望看到两件事;第一,不断增长的退货一是关于已用资本(ROCE),二是公司的金额已动用资本的比例。这向我们表明,它是一台复合机器,能够不断地将其收益再投资于企业,并产生更高的回报。不过,经过调查,霍利(纽约证券交易所股票代码:HLLY),我们认为它目前的趋势不适合一个多袋子的模式。
资本回报率(ROCE):它是什么?
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。对霍利的计算公式为:
已动用资本回报率=息税前收益(EBIT)?(总资产-流动负债)
0.082美元=9500万美元?(13亿美元-9600万美元)(根据截至2022年10月的往绩12个月计算).
所以呢,霍利的净资产收益率为8.2%。归根结底,这是一个较低的回报率,表现低于汽车零部件行业13%的平均水平。
看看我们对霍利的最新分析
纽约证券交易所:HLLY资本回报率2022年12月16日
在上面的图表中,我们比较了Holley之前的ROCE和它之前的表现,但可以说,未来更重要。如果您感兴趣,您可以在我们的免费分析师对该公司的预测报告。
回报趋势如何?
那里的资本回报率比我们在Holley看到的更好。该公司在过去两年里增加了24%的资本,这些资本的回报率稳定在8.2%。这种糟糕的ROCE目前并没有激发人们的信心,而且随着所用资本的增加,很明显,该公司没有将资金用于高回报投资。
我们可以从霍利的ROCE中学到什么
总而言之,霍利一直在向该业务投入更多资本,但这些资本的回报并没有增加。投资者似乎对这些趋势变得更好不抱太大希望,这可能是导致该股去年暴跌81%的部分原因。总体而言,我们不太受潜在趋势的鼓舞,我们认为在其他地方可能会有更好的机会找到多个袋子。
最后一个注意事项,您应该了解3个警示标志我们已经发现了霍利(包括1个不太适合我们的人)。
虽然霍利没有赚到最高的回报,但看看这个免费资产负债表稳健、股本回报率高的公司名单。
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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。