Be Wary Of Sif Holding (AMS:SIFG) And Its Returns On Capital
We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
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 Sif Holding, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.0078 = €3.9m ÷ (€739m - €239m) (Based on the trailing twelve months to December 2024).
So, Sif Holding has an ROCE of 0.8%. In absolute terms, that's a low return and it also under-performs the Electrical industry average of 12%.
View our latest analysis for Sif Holding
Above you can see how the current ROCE for Sif Holding 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 Sif Holding for free.
When we looked at the ROCE trend at Sif Holding, we didn't gain much confidence. Around five years ago the returns on capital were 5.5%, but since then they've fallen to 0.8%. However it looks like Sif Holding might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.
To conclude, we've found that Sif Holding is reinvesting in the business, but returns have been falling. And in the last five years, the stock has given away 10% so the market doesn't look too hopeful on these trends strengthening any time soon. 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.
If you're still interested in Sif Holding it's worth checking out our to see if it's trading at an attractive price in other respects.
While Sif Holding isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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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.
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