What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, 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. Having said that, from a first glance at Zhiyang Innovation Technology (SHSE:688191) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.
Return On Capital Employed (ROCE): What Is It?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Zhiyang Innovation Technology:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.085 = CN¥73m ÷ (CN¥1.2b - CN¥352m) (Based on the trailing twelve months to June 2022).
So, Zhiyang Innovation Technology has an ROCE of 8.5%. On its own, that's a low figure but it's around the 8.5% average generated by the Electrical industry.
View our latest analysis for Zhiyang Innovation Technology
SHSE:688191 Return on Capital Employed August 23rd 2022
While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings, revenue and cash flow of Zhiyang Innovation Technology, check out these free graphs here.
What Does the ROCE Trend For Zhiyang Innovation Technology Tell Us?
On the surface, the trend of ROCE at Zhiyang Innovation Technology doesn't inspire confidence. Around four years ago the returns on capital were 20%, but since then they've fallen to 8.5%. 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.
The Bottom Line
In summary, despite lower returns in the short term, we're encouraged to see that Zhiyang Innovation Technology is reinvesting for growth and has higher sales as a result. However, despite the promising trends, the stock has fallen 36% over the last year, so there might be an opportunity here for astute investors. As a result, we'd recommend researching this stock further to uncover what other fundamentals of the business can show us.
If you want to continue researching Zhiyang Innovation Technology, you might be interested to know about the 3 warning signs that our analysis has discovered.
While Zhiyang Innovation Technology 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.
我們應該尋找什麼樣的趨勢,我們想要找出能夠長期成倍增值的股票?首先,我們希望看到一個經過驗證的退貨關於已使用資本(ROCE)的增長,其次是擴張基地已動用資本的比例。這向我們表明,它是一臺複合機器,能夠不斷地將其收益再投資於企業,併產生更高的回報。話雖如此,從第一眼看智揚創新科技(上海證券交易所:688191)我們不會因為回報率的趨勢而從椅子上跳起來,但讓我們更深入地看看。
資本回報率(ROCE):它是什麼?
如果你以前沒有使用過ROCE,它衡量的是一家公司從業務資本中獲得的“回報”(税前利潤)。分析師對智揚創新科技的計算公式如下:
已動用資本回報率=息税前收益(EBIT)?(總資產-流動負債)
0.085=CN元7300萬?(CN元12億-CN元3.52億)(根據截至2022年6月的往績12個月計算).
所以,智揚創新科技的ROCE為8.5%。就其本身而言,這是一個很低的數字,但它大約是電氣行業8.5%的平均發電量。
查看我們對智揚創新科技的最新分析
上證所:2022年8月23日資本回報率688191
雖然過去並不代表未來,但瞭解一家公司歷史上的表現是有幫助的,這就是為什麼我們有上面的圖表。如果你想深入研究智揚創新科技的歷史收益、收入和現金流,請查看以下內容免費圖表在這裏。
智揚創新科技的ROCE趨勢告訴我們什麼?
從表面上看,智揚創新科技的ROCE趨勢並沒有激發信心。大約四年前,資本回報率為20%,但自那以來已降至8.5%。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。
底線
總而言之,儘管短期內回報較低,但我們感到鼓舞的是,智洋創新科技正在為增長進行再投資,並因此擁有更高的銷售額。然而,儘管趨勢看好,但該股在過去一年中下跌了36%,因此精明的投資者可能會有機會。因此,我們建議進一步研究這隻股票,以揭示該業務的其他基本面可以向我們展示什麼。
如果你想繼續研究智揚創新科技,你可能會有興趣瞭解一下3個警示標誌我們的分析發現。
雖然智揚創新科技目前的回報率可能不是最高的,但我們已經編制了一份目前股本回報率超過25%的公司名單。看看這個免費在這裏列出。
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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。