What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So on that note, Aris Water Solutions (NYSE:ARIS) looks quite promising in regards to its trends of return on capital.
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. Analysts use this formula to calculate it for Aris Water Solutions:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.061 = US$65m ÷ (US$1.2b - US$77m) (Based on the trailing twelve months to June 2022).
Thus, Aris Water Solutions has an ROCE of 6.1%. Ultimately, that's a low return and it under-performs the Commercial Services industry average of 9.8%.
View our latest analysis for Aris Water Solutions
NYSE:ARIS Return on Capital Employed October 28th 2022
Above you can see how the current ROCE for Aris Water Solutions 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 Aris Water Solutions here for free.
What Can We Tell From Aris Water Solutions' ROCE Trend?
While in absolute terms it isn't a high ROCE, it's promising to see that it has been moving in the right direction. Over the last two years, returns on capital employed have risen substantially to 6.1%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 21%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.
The Bottom Line On Aris Water Solutions' ROCE
To sum it up, Aris Water Solutions has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 20% return over the last year. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.
Aris Water Solutions does have some risks though, and we've spotted 1 warning sign for Aris Water Solutions that you might be interested in.
While Aris Water Solutions 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.
我們應該尋找哪些早期趨勢來識別一隻可能在長期內成倍增值的股票?一種常見的方法是嘗試找到一家擁有退貨已使用資本(ROCE)正在增加,同時也在增長金額已動用資本的比例。簡而言之,這些類型的企業是複利機器,這意味着它們不斷地以越來越高的回報率對收益進行再投資。所以在這個音符上,ARIS水務解決方案(紐約證券交易所股票代碼:ARIS)在其資本回報率趨勢方面看起來相當有希望。
資本回報率(ROCE):它是什麼?
如果您不確定,只需澄清一下,ROCE是一種評估公司投資於其業務的資本獲得多少税前收入(按百分比計算)的指標。分析師使用此公式計算ARIS Water Solutions的價格:
已動用資本回報率=息税前收益(EBIT)?(總資產-流動負債)
0.061美元=6500萬美元(12億美元-7700萬美元)(根據截至2022年6月的往績12個月計算).
因此,ARIS水務解決方案的淨資產收益率為6.1%。歸根結底,這是一個較低的回報率,表現低於商業服務業9.8%的平均水平。
查看我們對ARIS水務解決方案的最新分析
紐約證券交易所:ARIS 2022年10月28日的資本回報率
上面你可以看到Aris Water Solutions目前的淨資產收益率(ROCE)與其先前的資本回報率相比如何,但你只能從過去知道這麼多。如果您願意,您可以在這裏查看Aris Water Solutions分析師的預測免費的。
我們能從Aris Water Solutions的ROCE趨勢中看出什麼?
雖然從絕對值來看,這並不是一個很高的淨資產收益率,但它有希望看到它一直在朝着正確的方向前進。過去兩年,已動用資本回報率大幅上升至6.1%。該公司實際上每使用一美元資本就能賺到更多的錢,值得注意的是,資本額也增加了21%。越來越多的資本帶來越來越多的回報,這在多頭投資者中很常見,這就是為什麼我們對此印象深刻。
ARIS水務解決方案公司ROCE的底線
總而言之,阿里斯水務解決方案公司已經證明,它可以對業務進行再投資,並從所用資本中產生更高的回報,這是非常棒的。投資者似乎預計未來會出現更多這樣的情況,因為該股在過去一年裏為股東帶來了20%的回報。話雖如此,我們仍然認為,前景看好的基本面意味着該公司值得進行進一步的盡職調查。
不過,Aris Water Solutions確實存在一些風險,我們已經發現1個ARIS水溶液警告標誌你可能會感興趣的。
雖然Aris Water Solutions並沒有獲得最高的回報,但看看這個免費資產負債表穩健、股本回報率高的公司名單。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。