What are the early trends we should look for to identify a stock that could multiply in value over the long term? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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. That's why when we briefly looked at Xinyi Energy Holdings' (HKG:3868) ROCE trend, we were pretty happy with what we saw.
Return On Capital Employed (ROCE): What Is It?
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 Xinyi Energy Holdings, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.11 = HK$1.7b ÷ (HK$21b - HK$5.6b) (Based on the trailing twelve months to June 2022).
So, Xinyi Energy Holdings has an ROCE of 11%. In absolute terms, that's a satisfactory return, but compared to the Renewable Energy industry average of 6.8% it's much better.
See our latest analysis for Xinyi Energy Holdings
SEHK:3868 Return on Capital Employed September 19th 2022
Above you can see how the current ROCE for Xinyi Energy Holdings 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 Xinyi Energy Holdings here for free.
The Trend Of ROCE
The trend of ROCE doesn't stand out much, but returns on a whole are decent. The company has consistently earned 11% for the last five years, and the capital employed within the business has risen 107% in that time. 11% is a pretty standard return, and it provides some comfort knowing that Xinyi Energy Holdings has consistently earned this amount. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.
Another point to note, we noticed the company has increased current liabilities over the last five years. This is intriguing because if current liabilities hadn't increased to 27% of total assets, this reported ROCE would probably be less than11% because total capital employed would be higher.The 11% ROCE could be even lower if current liabilities weren't 27% of total assets, because the the formula would show a larger base of total capital employed. So while current liabilities isn't high right now, keep an eye out in case it increases further, because this can introduce some elements of risk.
What We Can Learn From Xinyi Energy Holdings' ROCE
In the end, Xinyi Energy Holdings has proven its ability to adequately reinvest capital at good rates of return. And since the stock has risen strongly over the last three years, it appears the market might expect this trend to continue. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.
Xinyi Energy Holdings does have some risks, we noticed 2 warning signs (and 1 which is significant) we think you should know about.
While Xinyi Energy Holdings 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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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?理想情况下,一家企业将呈现两种趋势;第一,增长退货关于已使用资本(ROCE),第二,增加金额已动用资本的比例。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。这就是为什么当我们短暂地查看信义能源控股有限公司(HKG:3868)ROCE趋势,我们对所看到的相当满意。
资本回报率(ROCE):它是什么?
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。要计算信义能源控股的这一指标,公式如下:
已动用资本回报率=息税前收益(EBIT)?(总资产-流动负债)
0.11=港币17亿?(港币210亿-56亿)(根据截至2022年6月的往绩12个月计算).
所以,信义能源控股的净资产收益率为11%。就绝对值而言,这是一个令人满意的回报率,但与可再生能源行业6.8%的平均回报率相比,这要好得多。
查看我们对信义能源控股的最新分析
联交所:3868已动用资本回报率2022年9月19日
上图中,你可以看到信义能源控股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,你可以查看这里报道信义能源控股的分析师的预测免费的。
ROCE的发展趋势
ROCE的趋势并不是很突出,但总体来说回报是不错的。该公司在过去五年中持续盈利11%,同期公司内部资本增长了107%。11%是一个相当标准的回报率,知道信义能源控股一直都能赚到这个数字,这让人感到些许安慰。这样的稳定回报可能并不令人兴奋,但如果它们能够长期保持下去,它们往往会为股东提供丰厚的回报。
另一点需要注意的是,我们注意到该公司在过去五年中增加了流动负债。这很耐人寻味,因为如果流动负债没有增加到总资产的27%,这一报告的净资产收益率可能会低于11%,因为使用的总资本会更高。如果流动负债不是总资产的27%,净资产收益率可能会更低,因为公式将显示总使用资本的基数更大。因此,尽管流动负债目前并不高,但要密切注意,以防它进一步增加,因为这可能会带来一些风险因素。
我们可以从信义能源控股的ROCE中学到什么
最终,信义能源控股证明了自己有能力以良好的回报率进行充分的资本再投资。由于该股在过去三年中强劲上涨,市场似乎预计这一趋势将继续下去。因此,尽管投资者似乎认识到了这些充满希望的趋势,但我们仍然认为,该股值得进一步研究。
我们注意到,信义能源控股确实存在一些风险2个警告标志(还有一点很重要)我们认为你应该知道。
尽管信义能源控股并没有获得最高的回报,但看看这个免费资产负债表稳健、股本回报率高的公司名单。
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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。