To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Although, when we looked at TTEC Holdings (NASDAQ:TTEC), it didn't seem to tick all of these boxes.
What Is Return On Capital Employed (ROCE)?
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 TTEC Holdings:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.065 = US$112m ÷ (US$2.1b - US$384m) (Based on the trailing twelve months to March 2024).
Thus, TTEC Holdings has an ROCE of 6.5%. In absolute terms, that's a low return and it also under-performs the Professional Services industry average of 14%.
NasdaqGS:TTEC Return on Capital Employed May 24th 2024
In the above chart we have measured TTEC Holdings' 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 TTEC Holdings for free.
How Are Returns Trending?
In terms of TTEC Holdings' historical ROCE movements, the trend isn't fantastic. Over the last five years, returns on capital have decreased to 6.5% from 12% five years ago. However it looks like TTEC Holdings might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. It may take some time before the company starts to see any change in earnings from these investments.
The Bottom Line On TTEC Holdings' ROCE
To conclude, we've found that TTEC Holdings is reinvesting in the business, but returns have been falling. It seems that investors have little hope of these trends getting any better and that may have partly contributed to the stock collapsing 81% in the last five years. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.
One more thing to note, we've identified 2 warning signs with TTEC Holdings and understanding these should be part of your investment process.
While TTEC Holdings 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.
多角株を見つけるには、ビジネス内での基本的なトレンドを何を見るべきでしょうか?まずは、拡大している資産に対する資本利益 (ROCE) を特定し、その上で資産を増やしているかどうかを確認します。シンプルに言えば、このようなビジネスは複利計算機であり、収益を持続的に再投資しているため、投資回収率がますます高くなっています。その点を踏まえると、現時点で国网通信 (SHSE:600131) のROCEはまずまずに見えますので、リターンのトレンドを見てみましょう。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)」。利益を増やし続けているビジネスであることを証明するには、利益をより高い割合で再投資している必要があります。NYSE:HD Return on Capital Employed 2024年4月10日資本を運用しています。つまり、会社は新規買に投資できる収益性の高い取り組みを続けることができます。これは、複利機械の特徴です。ただし、TTECホールディングス(NASDAQ:TTEC)を見ると、これらのすべてのボックスにチェックが入っているようには見えませんでした。
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。