If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, Life Time Group Holdings (NYSE:LTH) looks quite promising in regards to its trends of return on capital.
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. To calculate this metric for Life Time Group Holdings, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.039 = US$253m ÷ (US$7.0b - US$557m) (Based on the trailing twelve months to December 2023).
Therefore, Life Time Group Holdings has an ROCE of 3.9%. In absolute terms, that's a low return and it also under-performs the Hospitality industry average of 9.6%.
In the above chart we have measured Life Time Group Holdings' 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 analyst report for Life Time Group Holdings .
The Trend Of ROCE
While the ROCE isn't as high as some other companies out there, it's great to see it's on the up. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 28% over the last four years. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.
The Bottom Line
As discussed above, Life Time Group Holdings appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. Astute investors may have an opportunity here because the stock has declined 18% in the last year. That being the case, research into the company's current valuation metrics and future prospects seems fitting.
If you want to know some of the risks facing Life Time Group Holdings we've found 3 warning signs (1 is significant!) that you should be aware of before investing here.
While Life Time Group Holdings 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.
潜在的なマルチバッガーを見つけたい場合は、しばしば基本的なトレンドが示唆されることがあります。 まず、増加傾向にある資本利益率(ROCE)を見る必要があります。さらに、増加している資本利用の基盤が必要です。 これらがあれば、それは通常、素晴らしいビジネスモデルを持ち、収益性の高い再投資の機会が豊富な企業であることを意味します。 それについて話しましょう。 Array Technologies(NASDAQ:ARRY)の資本利益率に驚くべき変化を見つけましたので、見てみましょう。 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)」。したがって、ホームデポのROCEは40%です。それは素晴らしいリターンです。さらに、同じ業種の企業が獲得した13%の平均を上回っています。NYSE:HD Return on Capital Employed 2024年4月10日これを見ると、ビジネスモデルが素晴らしく利益が再投資する機会がたくさんある会社であることが一般的です。したがって、Life Time Group Holdings (NYSE:LTH)は、自己資本利益率のトレンドに関して非常に有望に見えます。
投下資本利益率(ROCE):何ですか?
ROCEが初めての場合、この指標は企業がビジネスに投下した自己資本に対して生み出す「リターン」(税引前利益)を測定します。Life Time Group Holdingsの場合、次の数式でこの指標を計算します。
前述のように、Life Time Group Holdingsは、自己資本が横ばいのままであるが、利益(利息や税金を除く)が増加しているため、リターンを生み出す能力が向上しているようです。注意深い投資家は、株価が過去1年間で18%下落しているため、この機会を活かすことができます。したがって、現在の評価指標と将来の展望に関する調査が適切です。
Life Time Group Holdingsに直面しているリスクのいくつかを知りたい場合は、ここで投資する前に知っておく必要がある3つの警告サイン(その内1つは重大なものです!)を見つけました。
Life Time Group Holdingsは最高のリターンを生み出していませんが、しっかりしたバランスシートを持ち、高い株主資本利益率を上げている企業の無料リストを確認してください。