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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Having said that, from a first glance at Shandong Sino-Agri United BiotechnologyLtd (SZSE:003042) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.
What Is Return On Capital Employed (ROCE)?
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. Analysts use this formula to calculate it for Shandong Sino-Agri United BiotechnologyLtd:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.067 = CN¥132m ÷ (CN¥3.4b - CN¥1.4b) (Based on the trailing twelve months to September 2022).
Thus, Shandong Sino-Agri United BiotechnologyLtd has an ROCE of 6.7%. Ultimately, that's a low return and it under-performs the Chemicals industry average of 8.9%.
See our latest analysis for Shandong Sino-Agri United BiotechnologyLtd
SZSE:003042 Return on Capital Employed December 23rd 2022
Historical performance is a great place to start when researching a stock so above you can see the gauge for Shandong Sino-Agri United BiotechnologyLtd's ROCE against it's prior returns. If you're interested in investigating Shandong Sino-Agri United BiotechnologyLtd's past further, check out this free graph of past earnings, revenue and cash flow.
What Can We Tell From Shandong Sino-Agri United BiotechnologyLtd's ROCE Trend?
In terms of Shandong Sino-Agri United BiotechnologyLtd's historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 24% over the last five years. 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. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.
On a related note, Shandong Sino-Agri United BiotechnologyLtd has decreased its current liabilities to 41% of total assets. So we could link some of this to the decrease in ROCE. Effectively this means their suppliers or short-term creditors are funding less of the business, which reduces some elements of risk. Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE. Keep in mind 41% is still pretty high, so those risks are still somewhat prevalent.
In Conclusion...
In summary, despite lower returns in the short term, we're encouraged to see that Shandong Sino-Agri United BiotechnologyLtd is reinvesting for growth and has higher sales as a result. Furthermore the stock has climbed 56% over the last year, it would appear that investors are upbeat about the future. So should these growth trends continue, we'd be optimistic on the stock going forward.
Shandong Sino-Agri United BiotechnologyLtd does have some risks though, and we've spotted 2 warning signs for Shandong Sino-Agri United BiotechnologyLtd that you might be interested in.
For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.
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。簡而言之，這些類型的企業是複利機器，這意味著它們不斷地以越來越高的回報率對收益進行再投資。話雖如此，從第一眼看山東中農聯合生物技術有限公司(SZSE：003042)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。
什麼是資本回報率(ROCE)？
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。分析師使用以下公式來計算山東中農聯合生物技術有限公司的價格：
已動用資本回報率=息稅前收益(EBIT)？(總資產-流動負債)
0.067=1.32億元？(34億元-14億元)(基於截至2022年9月的過去12個月).
因此，山東中農聯合生物技術有限公司的淨資產收益率為6.7%。歸根結底，這是一個較低的回報率，而且低於8.9%的化工行業平均水準。
查看我們對山東中農聯合生物技術有限公司的最新分析
深圳證券交易所：003042 2022年12月23日的資本回報率
在研究一隻股票時，歷史表現是一個很好的起點，因為在歷史表現之上，你可以看到山東中農聯合生物技術有限公司的ROCE相對於其先前回報的衡量標準。如果你有興趣進一步調查山東中農聯合生物技術有限公司的過去，請查看以下內容免費過去收益、收入和現金流的圖表。
從山東中農聯合生物技術股份有限公司的ROCE趨勢中，我們可以看出什麼？
就山東中農聯合生物技術有限公司歷史上的ROCE運動而言，這一趨勢並不美妙。更具體地說，ROCE在過去五年中從24%下降。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。如果增加的資本產生額外的回報，從長遠來看，企業和股東都將受益。
與此相關的是，山東中農聯合生物技術有限公司已將其流動負債降至總資產的41%。因此，我們可以將其中一些因素與淨資產收益率的下降聯繫起來。實際上，這意味著它們的供應商或短期債權人減少了對業務的融資，這降低了一些風險因素。由於企業基本上是用自有資金為更多的運營提供資金，你可以說這降低了企業產生淨資產收益率的效率。請記住，41%仍然是相當高的，所以這些風險在某種程度上仍然很普遍。
總之..。
總而言之，儘管短期內回報較低，但令我們感到鼓舞的是，山東中農聯合生物技術有限公司正在進行再投資以實現增長，並因此實現了更高的銷售額。此外，該股在過去一年中上漲了56%，似乎投資者對未來持樂觀態度。因此，如果這些增長趨勢繼續下去，我們將對未來的股票持樂觀態度。
不過，山東中農聯合生物技術有限公司確實存在一些風險，我們已經發現山東中農聯合生物技術有限公司的2個警告標誌你可能會感興趣的。
對於那些喜歡投資於穩固的公司，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。
