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Yahoo
a day ago
- Business
- Yahoo
Returns On Capital Are Showing Encouraging Signs At Texchem Resources Bhd (KLSE:TEXCHEM)
If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should 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. Speaking of which, we noticed some great changes in Texchem Resources Bhd's (KLSE:TEXCHEM) returns on capital, so let's have a look. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. 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. To calculate this metric for Texchem Resources Bhd, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.094 = RM40m ÷ (RM764m - RM339m) (Based on the trailing twelve months to March 2025). Thus, Texchem Resources Bhd has an ROCE of 9.4%. In absolute terms, that's a low return, but it's much better than the Industrials industry average of 7.6%. Check out our latest analysis for Texchem Resources Bhd Above you can see how the current ROCE for Texchem Resources Bhd 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 Texchem Resources Bhd . What Can We Tell From Texchem Resources Bhd's ROCE Trend? Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. Over the last five years, returns on capital employed have risen substantially to 9.4%. The amount of capital employed has increased too, by 29%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers. On a separate but related note, it's important to know that Texchem Resources Bhd has a current liabilities to total assets ratio of 44%, which we'd consider pretty high. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks. The Bottom Line On Texchem Resources Bhd's ROCE A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Texchem Resources Bhd has. Since the stock has only returned 37% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up. On a final note, we found 2 warning signs for Texchem Resources Bhd (1 is concerning) you should be aware of. If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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
Yahoo
2 days ago
- Business
- Yahoo
Returns Are Gaining Momentum At Cepatwawasan Group Berhad (KLSE:CEPAT)
To find a multi-bagger stock, what are the underlying trends we should look for in a business? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So on that note, Cepatwawasan Group Berhad (KLSE:CEPAT) looks quite promising in regards to its trends of return on capital. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. 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 Cepatwawasan Group Berhad: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.087 = RM40m ÷ (RM500m - RM37m) (Based on the trailing twelve months to March 2025). Thus, Cepatwawasan Group Berhad has an ROCE of 8.7%. On its own that's a low return on capital but it's in line with the industry's average returns of 9.4%. View our latest analysis for Cepatwawasan Group Berhad 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're interested in investigating Cepatwawasan Group Berhad's past further, check out this free graph covering Cepatwawasan Group Berhad's past earnings, revenue and cash flow. The Trend Of ROCE Cepatwawasan Group Berhad is showing promise given that its ROCE is trending up and to the right. The figures show that over the last five years, ROCE has grown 334% whilst employing roughly the same amount of capital. 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. What We Can Learn From Cepatwawasan Group Berhad's ROCE As discussed above, Cepatwawasan Group Berhad appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. And with a respectable 49% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence. Cepatwawasan Group Berhad does have some risks though, and we've spotted 2 warning signs for Cepatwawasan Group Berhad that you might be interested in. While Cepatwawasan Group Berhad 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. 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
5 days ago
- Business
- Yahoo
InnoTec TSS (FRA:TSS) Will Be Hoping To Turn Its Returns On Capital Around
What underlying fundamental trends can indicate that a company might be in decline? A business that's potentially in decline often shows two trends, a return on capital employed (ROCE) that's declining, and a base of capital employed that's also declining. This indicates to us that the business is not only shrinking the size of its net assets, but its returns are falling as well. And from a first read, things don't look too good at InnoTec TSS (FRA:TSS), so let's see why. 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. 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. To calculate this metric for InnoTec TSS, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.083 = €8.3m ÷ (€113m - €12m) (Based on the trailing twelve months to December 2024). Therefore, InnoTec TSS has an ROCE of 8.3%. In absolute terms, that's a low return and it also under-performs the Building industry average of 11%. See our latest analysis for InnoTec TSS Historical performance is a great place to start when researching a stock so above you can see the gauge for InnoTec TSS' ROCE against it's prior returns. If you'd like to look at how InnoTec TSS has performed in the past in other metrics, you can view this free graph of InnoTec TSS' past earnings, revenue and cash flow. So How Is InnoTec TSS' ROCE Trending? In terms of InnoTec TSS' historical ROCE movements, the trend doesn't inspire confidence. About five years ago, returns on capital were 13%, 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. Since returns are falling and the business has the same amount of assets employed, this can suggest it's a mature business that hasn't had much growth in the last five years. If these trends continue, we wouldn't expect InnoTec TSS to turn into a multi-bagger. The Bottom Line In summary, it's unfortunate that InnoTec TSS is generating lower returns from the same amount of capital. Despite the concerning underlying trends, the stock has actually gained 8.1% over the last five years, so it might be that the investors are expecting the trends to reverse. Either way, we aren't huge fans of the current trends and so with that we think you might find better investments elsewhere. If you'd like to know more about InnoTec TSS, we've spotted 4 warning signs, and 1 of them shouldn't be ignored. If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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
Yahoo
08-07-2025
- Business
- Yahoo
KHD Humboldt Wedag International (ETR:KWG) Might Have The Makings Of A Multi-Bagger
Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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, KHD Humboldt Wedag International (ETR:KWG) looks quite promising in regards to its trends of return on capital. 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. 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. To calculate this metric for KHD Humboldt Wedag International, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.076 = €10m ÷ (€255m - €121m) (Based on the trailing twelve months to December 2024). Therefore, KHD Humboldt Wedag International has an ROCE of 7.6%. On its own, that's a low figure but it's around the 8.6% average generated by the Machinery industry. Check out our latest analysis for KHD Humboldt Wedag International 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're interested in investigating KHD Humboldt Wedag International's past further, check out this free graph covering KHD Humboldt Wedag International's past earnings, revenue and cash flow. KHD Humboldt Wedag International has broken into the black (profitability) and we're sure it's a sight for sore eyes. While the business was unprofitable in the past, it's now turned things around and is earning 7.6% on its capital. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward. Because in the end, a business can only get so efficient. On a separate but related note, it's important to know that KHD Humboldt Wedag International has a current liabilities to total assets ratio of 48%, which we'd consider pretty high. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks. As discussed above, KHD Humboldt Wedag International appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. Investors may not be impressed by the favorable underlying trends yet because over the last five years the stock has only returned 34% to shareholders. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up. Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our that compares the share price and estimated value. If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.
Yahoo
07-07-2025
- Business
- Yahoo
Taylor Maritime (LON:TMI) Will Be Hoping To Turn Its Returns On Capital Around
When it comes to investing, there are some useful financial metrics that can warn us when a business is potentially in trouble. A business that's potentially in decline often shows two trends, a return on capital employed (ROCE) that's declining, and a base of capital employed that's also declining. This indicates the company is producing less profit from its investments and its total assets are decreasing. On that note, looking into Taylor Maritime (LON:TMI), we weren't too upbeat about how things were going. 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. 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 Taylor Maritime: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.17 = US$82m ÷ (US$489m - US$2.6m) (Based on the trailing twelve months to September 2024). Therefore, Taylor Maritime has an ROCE of 17%. In absolute terms, that's a satisfactory return, but compared to the Shipping industry average of 9.5% it's much better. Check out our latest analysis for Taylor Maritime Historical performance is a great place to start when researching a stock so above you can see the gauge for Taylor Maritime's ROCE against it's prior returns. If you'd like to look at how Taylor Maritime has performed in the past in other metrics, you can view this free graph of Taylor Maritime's past earnings, revenue and cash flow. We are a bit worried about the trend of returns on capital at Taylor Maritime. Unfortunately the returns on capital have diminished from the 24% that they were earning two years ago. On top of that, it's worth noting that the amount of capital employed within the business has remained relatively steady. Companies that exhibit these attributes tend to not be shrinking, but they can be mature and facing pressure on their margins from competition. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on Taylor Maritime becoming one if things continue as they have. In the end, the trend of lower returns on the same amount of capital isn't typically an indication that we're looking at a growth stock. And long term shareholders have watched their investments stay flat over the last three years. Unless there is a shift to a more positive trajectory in these metrics, we would look elsewhere. One more thing to note, we've identified 1 warning sign with Taylor Maritime and understanding this should be part of your investment process. While Taylor Maritime 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. Sign in to access your portfolio
