There are a few key trends to look for if we want to identify the next multi-bagger. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. With that in mind, the ROCE of Lihuayi Weiyuan Chemical (SHSE:600955) looks attractive right now, so lets see what the trend of returns can tell us.
Return On Capital Employed (ROCE): What Is It?
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. Analysts use this formula to calculate it for Lihuayi Weiyuan Chemical:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.20 = CN¥1.7b ÷ (CN¥9.5b - CN¥955m) (Based on the trailing twelve months to June 2022).
So, Lihuayi Weiyuan Chemical has an ROCE of 20%. That's a fantastic return and not only that, it outpaces the average of 9.7% earned by companies in a similar industry.
View our latest analysis for Lihuayi Weiyuan Chemical
SHSE:600955 Return on Capital Employed September 27th 2022
In the above chart we have measured Lihuayi Weiyuan Chemical'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.
What Does the ROCE Trend For Lihuayi Weiyuan Chemical Tell Us?
It's hard not to be impressed by Lihuayi Weiyuan Chemical's returns on capital. The company has employed 231% more capital in the last four years, and the returns on that capital have remained stable at 20%. Returns like this are the envy of most businesses and given it has repeatedly reinvested at these rates, that's even better. If these trends can continue, it wouldn't surprise us if the company became a multi-bagger.
On a side note, Lihuayi Weiyuan Chemical has done well to reduce current liabilities to 10% of total assets over the last four years. This can eliminate some of the risks inherent in the operations because the business has less outstanding obligations to their suppliers and or short-term creditors than they did previously.
Our Take On Lihuayi Weiyuan Chemical's ROCE
In the end, the company has proven it can reinvest it's capital at high rates of returns, which you'll remember is a trait of a multi-bagger. Yet over the last year the stock has declined 55%, so the decline might provide an opening. For that reason, savvy investors might want to look further into this company in case it's a prime investment.
Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for Lihuayi Weiyuan Chemical (of which 1 is significant!) that you should know about.
Lihuayi Weiyuan Chemical is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.
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.
如果我們想要識別下一個多袋子,有幾個關鍵趨勢需要尋找。通常,我們會注意到一種增長的趨勢退貨關於已使用資本(ROCE)以及與之相伴隨的是不斷擴大的基地已動用資本的比例。簡而言之,這些類型的企業是複利機器,這意味着它們不斷地以越來越高的回報率對收益進行再投資。考慮到這一點,ROCE麗華一威源化工(上交所:600955)現在看起來很有吸引力,所以讓我們看看回報趨勢能告訴我們什麼。
資本回報率(ROCE):它是什麼?
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。分析師們用這個公式來計算利華一威源化工的價格:
已動用資本回報率=息税前收益(EBIT)?(總資產-流動負債)
0.20=人民幣17億?(人民幣95億元-人民幣9.55億元)(根據截至2022年6月的往績12個月計算).
所以,利華一威遠化工的ROCE為20%。這是一個驚人的回報,不僅如此,它還超過了類似行業公司9.7%的平均回報率。
查看我們對利華一威遠化工的最新分析
上證綜指:2022年9月27日資本回報率600955
在上面的圖表中,我們比較了利華一威遠化工之前的淨資產收益率與其之前的業績,但可以説,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。
利華一威遠化工的ROCE趨勢告訴了我們什麼?
李華誼威遠化工的資本回報率很難不讓人印象深刻。該公司在過去四年裏增加了231%的資本,資本回報率一直穩定在20%。這樣的回報令大多數企業羨慕不已,考慮到它一再以這樣的利率進行再投資,這甚至更好。如果這些趨勢能夠繼續下去,那麼如果這家公司成為一家多業務公司,我們也不會感到驚訝。
另外,過去四年裏,利華一威遠化工在將流動負債降至總資產的10%方面做得很好。這可以消除業務中固有的一些風險,因為企業對供應商和/或短期債權人的未償債務比以前少了。
我們對利華一威遠化工ROCE的看法
最終,該公司證明瞭它可以將其資本以高回報率進行再投資,你會記得這是一個多袋子的特點。然而,在過去的一年裏,該股下跌了55%,因此這種下跌可能會提供一個機會。出於這個原因,精明的投資者可能希望更深入地研究這家公司,以防它是一項主要投資。
由於幾乎每家公司都面臨一些風險,瞭解它們是什麼是值得的,我們已經發現利華一威遠化工的3個警示標誌(其中1個是重要的!)這是你應該知道的。
利華一威遠化工並不是唯一一隻獲得高回報的股票。如果您想了解更多,請查看我們的免費基本面穩固、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。