There are a few key trends to look for if we want to identify the next multi-bagger. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding 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. However, after briefly looking over the numbers, we don't think CommScope Holding Company (NASDAQ:COMM) has the makings of a multi-bagger going forward, but let's have a look at why that may be.
What Is Return On Capital Employed (ROCE)?
For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for CommScope Holding Company:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.051 = US$388m ÷ (US$8.7b - US$1.0b) (Based on the trailing twelve months to March 2024).
Thus, CommScope Holding Company has an ROCE of 5.1%. Ultimately, that's a low return and it under-performs the Communications industry average of 8.4%.
Above you can see how the current ROCE for CommScope Holding Company 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 CommScope Holding Company for free.
The Trend Of ROCE
There hasn't been much to report for CommScope Holding Company's returns and its level of capital employed because both metrics have been steady for the past five years. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. So unless we see a substantial change at CommScope Holding Company in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger.
The Key Takeaway
In summary, CommScope Holding Company isn't compounding its earnings but is generating stable returns on the same amount of capital employed. Moreover, since the stock has crumbled 91% over the last five years, it appears investors are expecting the worst. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.
If you'd like to know more about CommScope Holding Company, we've spotted 3 warning signs, and 1 of them is concerning.
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.
次のマルチバッガーを特定するために注目すべきいくつかの重要な動向があります。通常、東gの成長傾向に注目する必要があります。 これに伴い、資産のベースが拡大していることを確認する必要があります。これにより、連続して収益を企業に再投資し、より高い収益を生み出すことができる複利機械であることがわかります。Torrid Holdings(NYSE:CURV)を見てみましょう。現時点で高いROCEを持っていますが、リターンのトレンドを確認しましょう。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)」。増え続ける売上高(revenue)はROCEのトレンドの中にあります。このように見ると、優れたビジネスモデルと豊富な収益性の高い再投資機会を持つ企業であることを示しています。しかし、Clearway Energy(NYSE:CWEN.A)を調査した結果、現在のトレンドが多倍化の形に合致していないと判断されました。NYSE:HD Return on Capital Employed 2024年4月10日使用資本の収益率が高いということは、企業が利益を生み出すイニシアチブを継続的に再投資することができるということであり、複利の特徴を持っているということです。しかし、数字を簡単に見てみると、CommScope Holding Company(NASDAQ:COMM)が今後のマルチバッガーの可能性を持っているとは考えていませんが、その理由を見てみましょう。
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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。