# Shaanxi Lighte Optoelectronics MaterialLtd (SHSE:688150) Is Doing The Right Things To Multiply Its Share Price

Simply Wall St ·  08/08 23:16

What are the early trends we should look for to identify a stock that could multiply in value over the long term? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Speaking of which, we noticed some great changes in Shaanxi Lighte Optoelectronics MaterialLtd's (SHSE:688150) returns on capital, so let's have a look.

## 上面您可以看到蒙托克可再生能源現行ROCE與之前資本回報的比較，但過去只能知道這麼多。如果您感興趣，可以查看我們免費的蒙托克可再生能源分析師報告，了解分析師的預測。

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 Shaanxi Lighte Optoelectronics MaterialLtd is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.038 = CN¥73m ÷ (CN¥2.0b - CN¥104m) (Based on the trailing twelve months to March 2024).

0.038 = CN¥7300萬 ÷（CN¥20億 - CN¥104m）（基於過去12個月截至2024年3月）。因此，陝西光電材料股份有限公司的資本回報率爲3.8%。

Thus, Shaanxi Lighte Optoelectronics MaterialLtd has an ROCE of 3.8%. On its own that's a low return on capital but it's in line with the industry's average returns of 4.2%.

Above you can see how the current ROCE for Shaanxi Lighte Optoelectronics MaterialLtd compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Shaanxi Lighte Optoelectronics MaterialLtd for free.

## 我們可以從陝西光電材料股份有限公司的資本回報率趨勢中得出什麼結論？陝西光電材料股份有限公司最近實現了盈利，因此其以前的投資似乎正在產生回報。股東毫無疑問將因此感到高興，因爲該業務五年前還在虧損，但目前其資本回報率爲3.8%。不僅如此，公司還比以前利用了387%的資本，但這是一家試圖實現盈利的公司所預期的。我們喜歡這種趨勢，因爲它告訴我們該公司有可盈利的再投資機會，如果繼續下去，就可以獲得多倍回報表現。

Shaanxi Lighte Optoelectronics MaterialLtd has recently broken into profitability so their prior investments seem to be paying off. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 3.8% on its capital. Not only that, but the company is utilizing 387% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 5.2%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. This tells us that Shaanxi Lighte Optoelectronics MaterialLtd has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

## 重要提示

Long story short, we're delighted to see that Shaanxi Lighte Optoelectronics MaterialLtd's reinvestment activities have paid off and the company is now profitable. Astute investors may have an opportunity here because the stock has declined 10% in the last year. With that in mind, we believe the promising trends warrant this stock for further investigation.

If you want to continue researching Shaanxi Lighte Optoelectronics MaterialLtd, you might be interested to know about the 1 warning sign that our analysis has discovered.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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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.