What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. Having said that, from a first glance at Zhejiang Lante Optics (SHSE:688127) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.
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. The formula for this calculation on Zhejiang Lante Optics is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.06 = CN¥95m ÷ (CN¥1.7b - CN¥101m) (Based on the trailing twelve months to March 2022).
Therefore, Zhejiang Lante Optics has an ROCE of 6.0%. Ultimately, that's a low return and it under-performs the Electronic industry average of 7.9%.
Check out our latest analysis for Zhejiang Lante Optics
SHSE:688127 Return on Capital Employed August 28th 2022
Above you can see how the current ROCE for Zhejiang Lante Optics 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 Zhejiang Lante Optics here for free.
So How Is Zhejiang Lante Optics' ROCE Trending?
When we looked at the ROCE trend at Zhejiang Lante Optics, we didn't gain much confidence. Over the last five years, returns on capital have decreased to 6.0% from 22% five years ago. However it looks like Zhejiang Lante Optics 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 may take some time before the company starts to see any change in earnings from these investments.
On a related note, Zhejiang Lante Optics has decreased its current liabilities to 6.0% 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 Zhejiang Lante Optics' ROCE
In summary, Zhejiang Lante Optics is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. And in the last year, the stock has given away 11% so the market doesn't look too hopeful on these trends strengthening any time soon. In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere.
Zhejiang Lante Optics does come with some risks though, we found 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored...
While Zhejiang Lante Optics 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.
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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.
我们应该寻找哪些早期趋势来识别一只可能在长期内成倍增值的股票？通常，我们会注意到一种增长的趋势退货关于已使用资本(ROCE)以及与之相伴随的是不断扩大的基地已动用资本的比例。简而言之，这些类型的企业是复利机器，这意味着它们不断地以越来越高的回报率对收益进行再投资。话虽如此，从第一眼看浙江朗特光学(上海证券交易所：688127)我们不会因为回报率的趋势而从椅子上跳起来，但让我们更深入地看看。
资本回报率(ROCE)：它是什么？
对于那些不知道的人来说，ROCE是一家公司的年度税前利润(其回报)相对于业务资本的衡量标准。浙江蓝天光学的计算公式为：
已动用资本回报率=息税前收益(EBIT)？(总资产-流动负债)
0.06=CN元9500万？(CN元17亿元-CN元1.01亿元)(根据截至2022年3月的往绩12个月计算).
所以呢，浙江朗特光学的净资产收益率为6.0%。归根结底，这是一个低回报率，低于7.9%的电子行业平均水平。
查看我们对浙江蓝特光学的最新分析
上证所：2022年8月28日资本回报率688127
上图中，你可以看到浙江蓝特光学目前的净资产收益率与之前的资本回报率相比如何，但从过去你只能看出这么多。如果你愿意，你可以在这里查看浙江兰特光学公司分析师的预测免费的。
那么，浙江蓝特光学的ROCE趋势如何？
当我们观察浙江蓝特光学的ROCE趋势时，我们并没有获得太多信心。过去五年，资本回报率从五年前的22%降至6.0%。然而，看起来浙江蓝特光学可能正在为长期增长进行再投资，因为尽管已动用的资本有所增加，但该公司的销售额在过去12个月里没有太大变化。该公司可能需要一段时间才能开始看到这些投资带来的收益变化。
与此相关的是，浙江蓝特光学已将流动负债降至总资产的6.0%。这可能在一定程度上解释了ROCE下降的原因。更重要的是，这可以降低业务的某些方面的风险，因为现在该公司的供应商或短期债权人为其运营提供的资金减少了。一些人会说，这降低了企业产生净资产收益率的效率，因为它现在用自己的钱为更多的运营提供资金。
我们对浙江朗特光学公司ROCE的看法
总而言之，浙江蓝特光学正在将资金重新投资到业务中，以实现增长，但不幸的是，销售额似乎还没有增加多少。去年，该股下跌了11%，因此市场看起来对这些趋势不会很快走强抱太大希望。无论如何，这只股票不具备上面讨论的多袋子股票的这些特征，所以如果这就是你正在寻找的，我们认为你在其他地方会有更多的运气。
不过，我们发现，浙江蓝特光学确实存在一些风险在我们的投资分析中出现了3个警告信号，其中一个是不应该被忽视的。
尽管浙江蓝特光学目前的回报率可能不是最高的，但我们编制了一份目前股本回报率超过25%的公司名单。看看这个免费在这里列出。
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本文由Simply Wall St.撰写，具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论，我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议，也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意，我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。
