If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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 Helix Energy Solutions Group (NYSE:HLX) and its trend of ROCE, we really liked what we saw.
What Is 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 Helix Energy Solutions Group:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.025 = US$51m ÷ (US$2.4b - US$383m) (Based on the trailing twelve months to June 2023).
Thus, Helix Energy Solutions Group has an ROCE of 2.5%. In absolute terms, that's a low return and it also under-performs the Energy Services industry average of 13%.
See our latest analysis for Helix Energy Solutions Group
NYSE:HLX Return on Capital Employed October 21st 2023
In the above chart we have measured Helix Energy Solutions Group's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Helix Energy Solutions Group here for free.
The Trend Of ROCE
While there are companies with higher returns on capital out there, we still find the trend at Helix Energy Solutions Group promising. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 54% over the last five years. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.
The Bottom Line On Helix Energy Solutions Group's ROCE
In summary, we're delighted to see that Helix Energy Solutions Group has been able to increase efficiencies and earn higher rates of return on the same amount of capital. Since the stock has only returned 23% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term.
On a separate note, we've found 1 warning sign for Helix Energy Solutions Group you'll probably want to know about.
If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.
運用資本利益率がより高い企業が存在する一方で、Helix Energy Solutions Groupの傾向は有望だと考えています。 データを見ると、ビジネスに投資された資本は比較的横ばいでありながら、過去5年間で生み出されたROCEは54%増加しています。 したがって、この事業はこれらの高いリターンを生成するために効率を上げたと考えられますが、追加の投資は必要なかったということです。 事業がより効率的になったことは素晴らしいことですが、有機的な成長のために内部投資する領域が不足している可能性があるため、これについてもより詳しく調査する価値があります。
Helix Energy Solutions GroupのROCEについての結論
まとめると、Helix Energy Solutions Groupが同じ資本額で効率を上げ、より高い収益率を得ることができたことは喜ばしいことです。過去5年間、株式は株主に対して23%しか返されていないため、有望なファンダメンタルズが投資家にまだ認識されていない可能性があります。そのため、長期的に倍増する要素があるかどうか、この株式にさらに注目する必要があります。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。