There are a few key trends to look for if we want to identify the next multi-bagger. 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, TransDigm Group (NYSE:TDG) looks quite promising in regards to its trends of return on capital.
Understanding Return On Capital Employed (ROCE)
Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for TransDigm Group:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.17 = US$3.3b ÷ (US$22b - US$2.2b) (Based on the trailing twelve months to March 2024).
Therefore, TransDigm Group has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 9.5% generated by the Aerospace & Defense industry.
NYSE:TDG Return on Capital Employed July 3rd 2024
In the above chart we have measured TransDigm 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 TransDigm Group for free.
The Trend Of ROCE
TransDigm Group is displaying some positive trends. The data shows that returns on capital have increased substantially over the last five years to 17%. The amount of capital employed has increased too, by 20%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.
The Bottom Line On TransDigm Group's ROCE
To sum it up, TransDigm Group has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has returned a staggering 215% to shareholders over the last five years, it looks like investors are recognizing these changes. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.
One final note, you should learn about the 3 warning signs we've spotted with TransDigm Group (including 2 which are potentially serious) .
While TransDigm Group 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
中立を守るために、次の複数の銘柄を特定するために注目すべきいくつかの主要トレンドがあります。1つ目は、増加している使用された資本に対して、資本利益率(ROCE)の確立した収益が見られることです。2つ目は、ビジネスの基盤における使用された資本の拡大があります。これは、投資を継続することができる収益力のある新規事業を持っているということです。これは複利効果のあるビジネスの特徴です。したがって、ホームデポ(NYSE:HD)について調べたところ、高いROCEを持っていますが、収益がどのように推移しているかについてはあまり好ましくなかったです。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日使用されている資本の利用率です。これが見られる場合、通常はビジネスモデルが優れており、収益性の高い再投資機会が多数ある企業であることを示します。この観点から見ると、トランスダイム・グループ(nyse:TDG)の資本利益率の傾向は非常に有望に思えます。
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。