If you're looking for a multi-bagger, there's a few things to keep an eye out for. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at Bestway Marine & Energy TechnologyLtd (SZSE:300008) and its trend of ROCE, we really liked what we saw.
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 Bestway Marine & Energy TechnologyLtd is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.06 = CN¥131m ÷ (CN¥4.0b - CN¥1.9b) (Based on the trailing twelve months to September 2023).
Thus, Bestway Marine & Energy TechnologyLtd has an ROCE of 6.0%. On its own, that's a low figure but it's around the 6.8% average generated by the Construction industry.
View our latest analysis for Bestway Marine & Energy TechnologyLtd
SZSE:300008 Return on Capital Employed November 27th 2023
Above you can see how the current ROCE for Bestway Marine & Energy TechnologyLtd 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 Bestway Marine & Energy TechnologyLtd here for free.
The Trend Of ROCE
We're delighted to see that Bestway Marine & Energy TechnologyLtd is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses five years ago, but now it's earning 6.0% which is a sight for sore eyes. And unsurprisingly, like most companies trying to break into the black, Bestway Marine & Energy TechnologyLtd is utilizing 60% more capital than it was five years ago. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.
On a separate but related note, it's important to know that Bestway Marine & Energy TechnologyLtd has a current liabilities to total assets ratio of 46%, 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.
The Key Takeaway
In summary, it's great to see that Bestway Marine & Energy TechnologyLtd has managed to break into profitability and is continuing to reinvest in its business. Since the stock has only returned 34% 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've found 1 warning sign for Bestway Marine & Energy TechnologyLtd that we think you should be aware of.
While Bestway Marine & Energy TechnologyLtd 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) simplywallst.com. 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.
在上方你可以看到Bestway Marine & Energy TechnologyLtd当前的投资回报率与其之前的资本回报率相比如何,但从过去可以看出来只有这么多。如果你愿意,你可以在这里免费查看报道Bestway Marine & Energy TechnologyLtd的分析师的预测。
ROCE 的趋势
我们很高兴看到Bestway Marine & Energy TechnologyLtd正在从其投资中获得回报,并且现在正在产生一些税前利润。该公司在五年前出现亏损,但现在的收入为6.0%,真是令人眼花缭乱。毫不奇怪,就像大多数试图破产的公司一样,Bestway Marine & Energy TechnologyLtd使用的资本比五年前增加了60%。这可以告诉我们,该公司拥有大量能够产生更高回报的再投资机会。
在另一份但相关的说明中,重要的是要知道Bestway Marine & Energy TechnologyLtd的流动负债与总资产的比率为46%,我们认为这个比率相当高。这可能会带来一些风险,因为该公司的运营基本上相当依赖其供应商或其他类型的短期债权人。理想情况下,我们希望看到这种情况减少,因为这将意味着承担风险的债务减少。
关键要点
总而言之,很高兴看到Bestway Marine & Energy TechnologyLtd成功实现盈利,并继续对其业务进行再投资。由于该股在过去五年中仅向股东回报了34%,因此投资者可能尚未认识到前景良好的基本面。因此,如果估值和其他指标相提并论,进一步探索这只股票可能会发现一个好机会。
最后一点,我们发现了Bestway Marine & Energy TechnologyLtd的1个警告信号,我们认为你应该注意这些警告。
尽管Bestway Marine & Energy TechnologyLtd目前可能无法获得最高的回报,但我们编制了一份目前股本回报率超过25%的公司名单。在这里查看这份免费清单。