If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Speaking of which, we noticed some great changes in Proya CosmeticsLtd's (SHSE:603605) returns on capital, so let's have a look.
Return On Capital Employed (ROCE): What Is It?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Proya CosmeticsLtd:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.29 = CN¥1.4b ÷ (CN¥6.9b - CN¥2.1b) (Based on the trailing twelve months to September 2023).
So, Proya CosmeticsLtd has an ROCE of 29%. In absolute terms that's a great return and it's even better than the Personal Products industry average of 9.3%.
See our latest analysis for Proya CosmeticsLtd
SHSE:603605 Return on Capital Employed December 5th 2023
In the above chart we have measured Proya CosmeticsLtd'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 Proya CosmeticsLtd here for free.
What Can We Tell From Proya CosmeticsLtd's ROCE Trend?
Investors would be pleased with what's happening at Proya CosmeticsLtd. Over the last five years, returns on capital employed have risen substantially to 29%. Basically the business is earning more per dollar of capital invested and in addition to that, 171% more capital is being employed now too. So we're very much inspired by what we're seeing at Proya CosmeticsLtd thanks to its ability to profitably reinvest capital.
Our Take On Proya CosmeticsLtd's ROCE
All in all, it's terrific to see that Proya CosmeticsLtd is reaping the rewards from prior investments and is growing its capital base. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Proya CosmeticsLtd can keep these trends up, it could have a bright future ahead.
One more thing, we've spotted 1 warning sign facing Proya CosmeticsLtd that you might find interesting.
If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning 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.
潜在的なマルチバッガーを見つけるためには、しばしば根底にあるトレンドが示唆を与えることがあります。最初に、証明された資産の増加を見たいと思うでしょう。最終的に、これは、利益を増やすために利益を再投資するビジネスであることを意味します。それがなぜ、私たちはShenzhen Transsion Holdings(SHSE:688036)の ROCEのトレンドを短く見たとき、私たちは非常に満足していたのです。資本利回り (ROCE)とは何ですか?わからない方には、ROCEは企業が事業に使用する資本から、税引き前利益をどれだけ生成できるかを測定します。アナリストは以下の式を使用して、Bumi Armada BerhadのROCEを計算します。「ROCE = 利息や税金を除いた利益 (EBIT) ÷ (総資産 - 流動負債)」。したがって、ホームデポのROCEは40%です。それは素晴らしいリターンです。さらに、同じ業種の企業が獲得した13%の平均を上回っています。NYSE:HD Return on Capital Employed 2024年4月10日資本雇用のパフォーマンスという指標です。これが表示される場合、通常は優れたビジネスモデルを持ち、利益を再投資するための十分な機会がある企業です。ところで、Proya Cosmetics Ltd(SHSE:603605)の資本利益率に良い変化があったことに気づきましたので、チェックしてみましょう。
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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。