Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, the ROCE of Buckle (NYSE:BKE) looks great, so lets see what the trend can tell us.
What Is 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. The formula for this calculation on Buckle is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.41 = US$271m ÷ (US$890m - US$221m) (Based on the trailing twelve months to February 2024).
Thus, Buckle has an ROCE of 41%. In absolute terms that's a great return and it's even better than the Specialty Retail industry average of 13%.
In the above chart we have measured Buckle'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 analyst report for Buckle .
The Trend Of ROCE
Investors would be pleased with what's happening at Buckle. Over the last five years, returns on capital employed have risen substantially to 41%. The amount of capital employed has increased too, by 52%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.
The Key Takeaway
In summary, it's great to see that Buckle can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue.
If you want to know some of the risks facing Buckle we've found 2 warning signs (1 can't be ignored!) that you should be aware of before investing here.
Buckle is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.
潜在的に成長するビジネスを見つけることは簡単ではありませんが、いくつかの主要な財務指標を見ることで可能です。通常、資本雇用のROIの成長トレンドに注意を払いたいと思います。加えて、資本雇用の拡大と一緒に。それは結局、利益を増加する率で再投資しているビジネスであることを示しています。しかし、数値を簡単に見てみた後、Doximity(NYSE:DOCS)は将来的にはマルチバッガーになる可能性がないと思いますが、なぜそう思うのかを見てみましょう。資本利回り (ROCE)とは何ですか?わからない方には、ROCEは企業が事業に使用する資本から、税引き前利益をどれだけ生成できるかを測定します。アナリストは以下の式を使用して、Bumi Armada BerhadのROCEを計算します。「ROCE = 利息や税金を除いた利益 (EBIT) ÷ (総資産 - 流動負債)」。増え続ける売上高(revenue)はROCEのトレンドの中にあります。このように見ると、優れたビジネスモデルと豊富な収益性の高い再投資機会を持つ企業であることを示しています。しかし、Clearway Energy(NYSE:CWEN.A)を調査した結果、現在のトレンドが多倍化の形に合致していないと判断されました。NYSE:HD Return on Capital Employed 2024年4月10日これは通常、優れたビジネスモデルと利益の再投資機会が豊富な企業であることを示す資本を使った収益を評価するメトリックです。Buckle(NYSE:BKE)のROCEは素晴らしく、トレンドを見てみましょう。