Latest news with #EBIT
Yahoo
a day ago
- Business
- Yahoo
Technology One (ASX:TNE) Might Be Having Difficulty Using Its Capital Effectively
To find a multi-bagger stock, what are the underlying trends we should look for in a business? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount 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, while the ROCE is currently high for Technology One (ASX:TNE), we aren't jumping out of our chairs because returns are decreasing. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Understanding Return On Capital Employed (ROCE) 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 Technology One, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.35 = AU$166m ÷ (AU$744m - AU$273m) (Based on the trailing twelve months to March 2025). Therefore, Technology One has an ROCE of 35%. That's a fantastic return and not only that, it outpaces the average of 14% earned by companies in a similar industry. See our latest analysis for Technology One In the above chart we have measured Technology One's 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 Technology One . What Can We Tell From Technology One's ROCE Trend? When we looked at the ROCE trend at Technology One, we didn't gain much confidence. To be more specific, while the ROCE is still high, it's fallen from 58% where it was five years ago. 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. If these investments prove successful, this can bode very well for long term stock performance. On a side note, Technology One has done well to pay down its current liabilities to 37% of total assets. That could partly explain why the ROCE has dropped. Effectively this means their suppliers or short-term creditors are funding less of the business, which reduces some elements of risk. Some would claim this reduces the business' efficiency at generating ROCE since it is now funding more of the operations with its own money. What We Can Learn From Technology One's ROCE While returns have fallen for Technology One in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. And the stock has done incredibly well with a 394% return over the last five years, so long term investors are no doubt ecstatic with that result. So while the underlying trends could already be accounted for by investors, we still think this stock is worth looking into further. If you're still interested in Technology One it's worth checking out our to see if it's trading at an attractive price in other respects. Technology One 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) 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. Sign in to access your portfolio
Yahoo
2 days ago
- Business
- Yahoo
UG Healthcare (Catalist:8K7) Is Reinvesting At Lower Rates Of Return
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. In light of that, when we looked at UG Healthcare (Catalist:8K7) and its ROCE trend, we weren't exactly thrilled. 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. Understanding Return On Capital Employed (ROCE) If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for UG Healthcare: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.0019 = S$354k ÷ (S$232m - S$45m) (Based on the trailing twelve months to December 2024). Therefore, UG Healthcare has an ROCE of 0.2%. Ultimately, that's a low return and it under-performs the Medical Equipment industry average of 7.8%. See our latest analysis for UG Healthcare While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how UG Healthcare has performed in the past in other metrics, you can view this free graph of UG Healthcare's past earnings, revenue and cash flow. How Are Returns Trending? When we looked at the ROCE trend at UG Healthcare, we didn't gain much confidence. Around five years ago the returns on capital were 6.3%, but since then they've fallen to 0.2%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance. On a side note, UG Healthcare has done well to pay down its current liabilities to 19% of total assets. That could partly explain why the ROCE has dropped. What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations. Some would claim this reduces the business' efficiency at generating ROCE since it is now funding more of the operations with its own money. Our Take On UG Healthcare's ROCE In summary, despite lower returns in the short term, we're encouraged to see that UG Healthcare is reinvesting for growth and has higher sales as a result. Despite these promising trends, the stock has collapsed 87% over the last five years, so there could be other factors hurting the company's prospects. Therefore, we'd suggest researching the stock further to uncover more about the business. Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 2 warning signs for UG Healthcare (of which 1 is a bit unpleasant!) that you should know about. While UG Healthcare may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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.
Yahoo
2 days ago
- Business
- Yahoo
Eneco Energy's (SGX:R14) Returns On Capital Are Heading Higher
If you're looking for a multi-bagger, there's a few things to keep an eye out for. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So when we looked at Eneco Energy (SGX:R14) and its trend of ROCE, we really liked what we saw. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Understanding Return On Capital Employed (ROCE) If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Eneco Energy: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.0056 = S$148k ÷ (S$37m - S$11m) (Based on the trailing twelve months to December 2024). Thus, Eneco Energy has an ROCE of 0.6%. Ultimately, that's a low return and it under-performs the Logistics industry average of 4.6%. Check out our latest analysis for Eneco Energy Historical performance is a great place to start when researching a stock so above you can see the gauge for Eneco Energy's ROCE against it's prior returns. If you're interested in investigating Eneco Energy's past further, check out this free graph covering Eneco Energy's past earnings, revenue and cash flow. What Does the ROCE Trend For Eneco Energy Tell Us? Eneco Energy has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 0.6% which is a sight for sore eyes. Not only that, but the company is utilizing 191% 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 29%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. So shareholders would be pleased that the growth in returns has mostly come from underlying business performance. The Key Takeaway To the delight of most shareholders, Eneco Energy has now broken into profitability. Astute investors may have an opportunity here because the stock has declined 18% in the last year. So researching this company further and determining whether or not these trends will continue seems justified. On a separate note, we've found 2 warning signs for Eneco Energy you'll probably want to know about. While Eneco Energy 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) 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Returns On Capital At Suria Capital Holdings Berhad (KLSE:SURIA) Paint A Concerning Picture
What financial metrics can indicate to us that a company is maturing or even in decline? Businesses in decline often have two underlying trends, firstly, a declining return on capital employed (ROCE) and a declining base of capital employed. Basically the company is earning less on its investments and it is also reducing its total assets. So after we looked into Suria Capital Holdings Berhad (KLSE:SURIA), the trends above didn't look too great. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. What Is Return On Capital Employed (ROCE)? 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 Suria Capital Holdings Berhad: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.025 = RM33m ÷ (RM1.4b - RM89m) (Based on the trailing twelve months to March 2025). So, Suria Capital Holdings Berhad has an ROCE of 2.5%. In absolute terms, that's a low return and it also under-performs the Infrastructure industry average of 6.5%. See our latest analysis for Suria Capital Holdings Berhad In the above chart we have measured Suria Capital Holdings Berhad'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 analyst report for Suria Capital Holdings Berhad . The Trend Of ROCE There is reason to be cautious about Suria Capital Holdings Berhad, given the returns are trending downwards. About five years ago, returns on capital were 4.0%, however they're now substantially lower than that as we saw above. Meanwhile, capital employed in the business has stayed roughly the flat over the period. Companies that exhibit these attributes tend to not be shrinking, but they can be mature and facing pressure on their margins from competition. If these trends continue, we wouldn't expect Suria Capital Holdings Berhad to turn into a multi-bagger. Our Take On Suria Capital Holdings Berhad's ROCE In summary, it's unfortunate that Suria Capital Holdings Berhad is generating lower returns from the same amount of capital. Yet despite these poor fundamentals, the stock has gained a huge 106% over the last five years, so investors appear very optimistic. Regardless, we don't feel too comfortable with the fundamentals so we'd be steering clear of this stock for now. Suria Capital Holdings Berhad could be trading at an attractive price in other respects, so you might find our on our platform quite valuable. While Suria Capital Holdings Berhad 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) 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.
Yahoo
3 days ago
- Business
- Yahoo
Po Valley Energy (ASX:PVE) Is Investing Its Capital With Increasing Efficiency
There are a few key trends to look for if we want to identify the next multi-bagger. 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. So when we looked at the ROCE trend of Po Valley Energy (ASX:PVE) we really liked what we saw. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Return On Capital Employed (ROCE): What Is It? 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. To calculate this metric for Po Valley Energy, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.20 = €3.4m ÷ (€18m - €1.2m) (Based on the trailing twelve months to December 2024). Therefore, Po Valley Energy has an ROCE of 20%. That's a fantastic return and not only that, it outpaces the average of 6.5% earned by companies in a similar industry. View our latest analysis for Po Valley Energy Above you can see how the current ROCE for Po Valley Energy compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Po Valley Energy . So How Is Po Valley Energy's ROCE Trending? The fact that Po Valley Energy is now generating some pre-tax profits from its prior investments is very encouraging. The company was generating losses five years ago, but now it's earning 20% which is a sight for sore eyes. In addition to that, Po Valley Energy is employing 148% more capital than previously which is expected of a company that's trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger. One more thing to note, Po Valley Energy has decreased current liabilities to 6.4% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. Therefore we can rest assured that the growth in ROCE is a result of the business' fundamental improvements, rather than a cooking class featuring this company's books. In Conclusion... In summary, it's great to see that Po Valley Energy has managed to break into profitability and is continuing to reinvest in its business. Since the stock has returned a solid 50% to shareholders over the last five years, it's fair to say investors are beginning to recognize these changes. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist. If you want to continue researching Po Valley Energy, you might be interested to know about the 1 warning sign that our analysis has discovered. If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
