If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. However, after investigating Oppein Home Group (SHSE:603833), we don't think it's current trends fit the mold of a multi-bagger.
Understanding Return On Capital Employed (ROCE)
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Oppein Home Group:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.14 = CN¥3.0b ÷ (CN¥33b - CN¥13b) (Based on the trailing twelve months to September 2023).
Thus, Oppein Home Group has an ROCE of 14%. In absolute terms, that's a satisfactory return, but compared to the Consumer Durables industry average of 7.7% it's much better.
Check out our latest analysis for Oppein Home Group
SHSE:603833 Return on Capital Employed December 14th 2023
In the above chart we have measured Oppein Home Group's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.
What The Trend Of ROCE Can Tell Us
In terms of Oppein Home Group's historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 22% over the last five years. Meanwhile, the business is utilizing more capital but this hasn't moved the needle much in terms of sales in the past 12 months, so this could reflect longer term investments. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.
The Bottom Line On Oppein Home Group's ROCE
To conclude, we've found that Oppein Home Group is reinvesting in the business, but returns have been falling. And with the stock having returned a mere 20% in the last five years to shareholders, you could argue that they're aware of these lackluster trends. Therefore, if you're looking for a multi-bagger, we'd propose looking at other options.
If you want to continue researching Oppein Home Group, you might be interested to know about the 1 warning sign that our analysis has discovered.
For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.
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.
如果你在尋找下一款多功能裝袋機時不確定從哪裏開始,那麼你應該留意一些關鍵趨勢。首先,我們希望看到經過驗證的 返回 關於正在增加的資本使用率(ROCE),其次是擴大 基礎 已動用資本的百分比。歸根結底,這表明這是一家以更高的回報率對利潤進行再投資的企業。但是,在調查了Oppein Home Group(SHSE: 603833)之後,我們認爲它目前的趨勢不符合多功能裝袋機的模式。
了解資本使用回報率 (ROCE)
對於那些不確定ROCE是什麼的人來說,它衡量的是公司從業務中使用的資本中可以產生的稅前利潤額。分析師使用以下公式爲 Oppein Home Group 計算: