To find a multi-bagger stock, what are the underlying trends we should look for in a business? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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 briefly looking over the numbers, we don't think BYD Electronic (International) (HKG:285) has the makings of a multi-bagger going forward, but let's have a look at why that may be.
Understanding Return On Capital Employed (ROCE)
For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on BYD Electronic (International) is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.057 = CN¥1.4b ÷ (CN¥41b - CN¥16b) (Based on the trailing twelve months to December 2021).
Therefore, BYD Electronic (International) has an ROCE of 5.7%. Ultimately, that's a low return and it under-performs the Communications industry average of 7.6%.
See our latest analysis for BYD Electronic (International)
SEHK:285 Return on Capital Employed July 18th 2022
In the above chart we have measured BYD Electronic (International)'s prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free report for BYD Electronic (International).
So How Is BYD Electronic (International)'s ROCE Trending?
On the surface, the trend of ROCE at BYD Electronic (International) doesn't inspire confidence. To be more specific, ROCE has fallen from 9.2% over the last five years. Although, given both revenue and the amount of assets employed in the business have increased, it could suggest the company is investing in growth, and the extra capital has led to a short-term reduction in ROCE. If these investments prove successful, this can bode very well for long term stock performance.
On a related note, BYD Electronic (International) has decreased its current liabilities to 39% of total assets. That could partly explain why the ROCE has dropped. 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
In summary, despite lower returns in the short term, we're encouraged to see that BYD Electronic (International) is reinvesting for growth and has higher sales as a result. These trends are starting to be recognized by investors since the stock has delivered a 20% gain to shareholders who've held over the last five years. Therefore we'd recommend looking further into this stock to confirm if it has the makings of a good investment.
On a final note, we've found 2 warning signs for BYD Electronic (International) that we think you should be aware of.
While BYD Electronic (International) isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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.
要找到一隻多袋股票,我們應該在一家企業中尋找什麼潛在趨勢?理想情況下,一家企業將呈現兩種趨勢;第一,增長退貨關於已使用資本(ROCE),第二,增加金額已動用資本的比例。基本上,這意味着一家公司有盈利的舉措,可以繼續進行再投資,這是複合機器的一個特點。然而,在簡單地看了一下數字之後,我們認為比亞迪電子(國際)(HKG:285)具備了未來實現多個袋子的條件,但讓我們看看為什麼會這樣。
瞭解資本回報率(ROCE)
對於那些不知道的人來説,ROCE是一家公司的年度税前利潤(其回報)相對於業務資本的衡量標準。比亞迪電子(國際)的這一計算公式為:
已動用資本回報率=息税前收益(EBIT)?(總資產-流動負債)
0.057=CN元14億?(CN元41B-CN元16B)(根據截至2021年12月的往績12個月計算).
所以呢,比亞迪電子(國際)的淨資產收益率為5.7%。歸根結底,這是一個很低的回報率,而且低於7.6%的通信行業平均水平。
請看我們對比亞迪電子(國際)的最新分析
聯交所:2022年7月18日資本回報率285
在上面的圖表中,我們比較了比亞迪電子(國際)之前的淨資產收益率和它之前的表現,但可以説未來更重要。如果你想看看分析師對未來的預測,你應該看看我們的免費比亞迪電子(國際)報道。
那麼,比亞迪電子(國際)的ROCE趨勢如何?
從表面上看,比亞迪電子(國際)的ROCE趨勢並沒有激發人們的信心。更具體地説,ROCE在過去五年中從9.2%下降。儘管,考慮到收入和業務中使用的資產數量都有所增加,這可能表明該公司正在投資於增長,而額外的資本導致了ROCE的短期下降。如果這些投資被證明是成功的,這可能是長期股票表現的好兆頭。
另一方面,比亞迪電子(國際)已將其流動負債降至總資產的39%。這可能在一定程度上解釋了ROCE下降的原因。實際上,這意味着它們的供應商或短期債權人減少了對業務的融資,這降低了一些風險因素。一些人會説,這降低了企業產生淨資產收益率的效率,因為它現在用自己的錢為更多的運營提供資金。
底線
總而言之,儘管短期內回報較低,但我們很高興看到比亞迪電子(國際)正在為增長而進行再投資,並因此獲得了更高的銷售額。這些趨勢開始得到投資者的認可,因為該股在過去五年裏為持有該股的股東帶來了20%的收益。因此,我們建議進一步研究這隻股票,以確認它是否具備良好的投資條件。
最後一點,我們發現比亞迪電子(國際)的2個警告標誌我們認為你應該意識到。
雖然比亞迪電子(國際)的回報並不是最高的,但看看這個免費資產負債表穩健、股本回報率高的公司名單。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。