If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base 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 briefly looking over the numbers, we don't think B&G Foods (NYSE:BGS) has the makings of a multi-bagger going forward, but let's have a look at why that may be.
Return On Capital Employed (ROCE): What Is It?
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on B&G Foods is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.075 = US$234m ÷ (US$3.4b - US$244m) (Based on the trailing twelve months to March 2024).
Therefore, B&G Foods has an ROCE of 7.5%. In absolute terms, that's a low return and it also under-performs the Food industry average of 11%.
Above you can see how the current ROCE for B&G Foods compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for B&G Foods .
So How Is B&G Foods' ROCE Trending?
Over the past five years, B&G Foods' ROCE and capital employed have both remained mostly flat. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So unless we see a substantial change at B&G Foods in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger. That probably explains why B&G Foods has been paying out 80% of its earnings as dividends to shareholders. These mature businesses typically have reliable earnings and not many places to reinvest them, so the next best option is to put the earnings into shareholders pockets.
In Conclusion...
We can conclude that in regards to B&G Foods' returns on capital employed and the trends, there isn't much change to report on. And investors appear hesitant that the trends will pick up because the stock has fallen 46% in the last five years. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.
One more thing: We've identified 4 warning signs with B&G Foods (at least 1 which is a bit concerning) , and understanding these would certainly be useful.
While B&G Foods 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.
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.
マルチバッガーを探している場合、注意することがいくつかあります。通常、増え続ける資本を用いた収益(ROCE)の傾向に気を付ける必要があります。つまり、利益を出し続けることができる事業展開をしている会社が、複利計算マシンの特徴を持っているということです。この点において、アプライドインダストリアルテクノロジーズ(NYSE:AIT)が示している傾向は非常に有望に見えるため、見ていきましょう。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日これは中立的な資本利用率です。これにより、収益をビジネスに再投資し、高いリターンを生み出すことができることがわかります。ただし、数字を簡単に調べた後、私たちはB&G Foods(NYSE:BGS)が今後多角化するものとは考えていませんが、なぜそうなるか見てみましょう。