To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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. So on that note, Skyline Champion (NYSE:SKY) looks quite promising in regards to its trends of return on capital.
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. The formula for this calculation on Skyline Champion is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.11 = US$175m ÷ (US$1.9b - US$390m) (Based on the trailing twelve months to March 2024).
So, Skyline Champion has an ROCE of 11%. In isolation, that's a pretty standard return but against the Consumer Durables industry average of 15%, it's not as good.
In the above chart we have measured Skyline Champion'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 analyst report for Skyline Champion .
So How Is Skyline Champion's ROCE Trending?
The fact that Skyline Champion is now generating some pre-tax profits from its prior investments is very encouraging. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 11% on its capital. And unsurprisingly, like most companies trying to break into the black, Skyline Champion is utilizing 211% more capital than it was five years ago. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.
What We Can Learn From Skyline Champion's ROCE
To the delight of most shareholders, Skyline Champion has now broken into profitability. And a remarkable 171% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Skyline Champion can keep these trends up, it could have a bright future ahead.
On a separate note, we've found 2 warning signs for Skyline Champion you'll probably want to know about.
While Skyline Champion isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
マルチバッガー株を見つけるには、ビジネスにおける基盤的なトレンドをどのように見る必要がありますか?まず、増加している証明済みの資本利益(ROCE)を見たいと思います。第二に、資本利用の拡大します。これらを見つけることができれば、通常、素晴らしいビジネスモデルを持ち、収益性の高い再投資機会に恵まれた企業であることを意味します。ただし、DYNAM JAPAN HOLDINGS(HKG:6889)を調べた時は、すべての条件を満たしているわけではないように思えました。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日あるビジネスで使用された資本の収益が非常に高い場合、通常は同社が優れたビジネスモデルと豊富な収益再投資機会を持っていることを意味します。その点で、Skyline Champion(nyse:SKY)は、その資本回収率のトレンドに関してかなり有望に見えます。
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。