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.
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.
我們應該尋找哪些早期趨勢來識別一隻可能在長期內成倍增值的股票?在其他方面,我們希望看到兩件事;第一,不斷增長的退貨一是關於已用資本(ROCE),二是公司的金額已動用資本的比例。這向我們表明,它是一臺復合機器,能夠不斷地將其收益再投資於企業,並產生更高的回報。不過,經過調查,霍利(紐約證券交易所股票代碼:HLLY),我們認為它目前的趨勢不適合一個多袋子的模式。
資本回報率(ROCE):它是什麼?
如果您不確定,只需澄清一下,ROCE是一種評估公司投資於其業務的資本獲得多少稅前收入(按百分比計算)的指標。對霍利的計算公式為:
已動用資本回報率=息稅前收益(EBIT)?(總資產-流動負債)
0.082美元=9500萬美元?(13億美元-9600萬美元)(根據截至2022年10月的往績12個月計算).
所以呢,霍利的淨資產收益率為8.2%。歸根結底,這是一個較低的回報率,表現低於汽車零部件行業13%的平均水準。
看看我們對霍利的最新分析
紐約證券交易所:HLLY資本回報率2022年12月16日
在上面的圖表中,我們比較了Holley之前的ROCE和它之前的表現,但可以說,未來更重要。如果您感興趣,您可以在我們的免費分析師對該公司的預測報告。
回報趨勢如何?
那裡的資本回報率比我們在Holley看到的更好。該公司在過去兩年裡增加了24%的資本,這些資本的回報率穩定在8.2%。這種糟糕的ROCE目前並沒有激發人們的信心,而且隨著所用資本的增加,很明顯,該公司沒有將資金用於高回報投資。
我們可以從霍利的ROCE中學到什麼
總而言之,霍利一直在向該業務投入更多資本,但這些資本的回報並沒有增加。投資者似乎對這些趨勢變得更好不抱太大希望,這可能是導致該股去年暴跌81%的部分原因。總體而言,我們不太受潛在趨勢的鼓舞,我們認為在其他地方可能會有更好的機會找到多個袋子。
最後一個注意事項,您應該瞭解3個警示標誌我們已經發現了霍利(包括1個不太適合我們的人)。
雖然霍利沒有賺到最高的回報,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。