To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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. Although, when we looked at Huisen Household International Group (HKG:2127), it didn't seem to tick all of these boxes.
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. The formula for this calculation on Huisen Household International Group is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.17 = CN¥876m ÷ (CN¥5.7b - CN¥586m) (Based on the trailing twelve months to June 2022).
Thus, Huisen Household International Group has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 10% generated by the Consumer Durables industry.
See our latest analysis for Huisen Household International Group
SEHK:2127 Return on Capital Employed September 14th 2022
Historical performance is a great place to start when researching a stock so above you can see the gauge for Huisen Household International Group's ROCE against it's prior returns. If you want to delve into the historical earnings, revenue and cash flow of Huisen Household International Group, check out these free graphs here.
What The Trend Of ROCE Can Tell Us
In terms of Huisen Household International Group's historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 28% over the last four years. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It may take some time before the company starts to see any change in earnings from these investments.
On a side note, Huisen Household International Group has done well to pay down its current liabilities to 10% 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.
The Key Takeaway
Bringing it all together, while we're somewhat encouraged by Huisen Household International Group's reinvestment in its own business, we're aware that returns are shrinking. Moreover, since the stock has crumbled 84% over the last year, it appears investors are expecting the worst. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.
While Huisen Household International Group doesn't shine too bright in this respect, it's still worth seeing if the company is trading at attractive prices. You can find that out with our FREE intrinsic value estimation on our platform.
While Huisen Household International Group 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.
要找到一只多袋股票,我们应该在一家企业中寻找什么潜在趋势?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。虽然,当我们看到慧森家居国际集团(HKG:2127),它似乎没有勾选所有这些框。
什么是资本回报率(ROCE)?
如果您不确定,只需澄清一下,ROCE是一种评估公司投资于其业务的资本获得多少税前收入(按百分比计算)的指标。惠森家居国际集团的这一计算公式为:
已动用资本回报率=息税前收益(EBIT)?(总资产-流动负债)
0.17=CN元8.76亿?(CN元57亿-CN元5.86亿)(根据截至2022年6月的往绩12个月计算).
因此,惠森家居国际集团的净资产收益率为17%。就其本身而言,这是一个标准的回报,但它比耐用消费品行业10%的回报率要好得多。
查看我们对慧森家居国际集团的最新分析
联交所:2127已动用资本回报率2022年9月14日
当研究一只股票时,历史表现是一个很好的起点,因为在历史表现上方,你可以看到辉森家居国际集团相对于其先前回报的ROCE的衡量标准。如果你想深入研究惠森家居国际集团的历史收益、收入和现金流,请查看以下内容免费图表在这里。
ROCE的走势告诉我们什么
就辉森家居国际集团历史上的ROCE运动而言,这一趋势并不美妙。更具体地说,ROCE在过去四年中从28%下降。另一方面,该公司一直在使用更多的资本,但去年的销售额没有相应的改善,这可能表明这些投资是更长期的投资。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。
另外,惠森家居国际集团在偿还当前负债至总资产的10%方面做得很好。这可能在一定程度上解释了ROCE下降的原因。实际上,这意味着它们的供应商或短期债权人减少了对业务的融资,这降低了一些风险因素。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。
关键的外卖
综上所述,虽然惠森家居国际集团对自己业务的再投资多少让我们感到鼓舞,但我们意识到回报正在缩水。此外,由于该公司股价在过去一年里暴跌了84%,投资者似乎在预期最坏的情况。总而言之,内在的趋势并不是典型的多重投放者,所以如果这是你想要的,我们认为你在其他地方可能会有更多的运气。
虽然慧森家居国际集团在这方面的表现不是太好,但该公司的股价是否具有吸引力仍值得关注。您可以通过我们的自由内在价值估计在我们的平台上。
虽然辉森家居国际集团目前的回报率可能不是最高的,但我们已经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。