If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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 PNC Process Systems (SHSE:603690), it didn't seem to tick all of these boxes.
Understanding 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. To calculate this metric for PNC Process Systems, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.054 = CN¥365m ÷ (CN¥12b - CN¥5.0b) (Based on the trailing twelve months to September 2023).
So, PNC Process Systems has an ROCE of 5.4%. In absolute terms, that's a low return but it's around the Machinery industry average of 6.1%.
View our latest analysis for PNC Process Systems
SHSE:603690 Return on Capital Employed December 19th 2023
Above you can see how the current ROCE for PNC Process Systems compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free report for PNC Process Systems.
What Does the ROCE Trend For PNC Process Systems Tell Us?
Unfortunately, the trend isn't great with ROCE falling from 12% five years ago, while capital employed has grown 1,229%. That being said, PNC Process Systems raised some capital prior to their latest results being released, so that could partly explain the increase in capital employed. PNC Process Systems probably hasn't received a full year of earnings yet from the new funds it raised, so these figures should be taken with a grain of salt. Additionally, we found that PNC Process Systems' most recent EBIT figure is around the same as the prior year, so we'd attribute the drop in ROCE mostly to the capital raise.
On a side note, PNC Process Systems has done well to pay down its current liabilities to 42% of total assets. So we could link some of this to the decrease in ROCE. What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations. Since the business is basically funding more of its operations with it's own money, you could argue this has made the business less efficient at generating ROCE. Either way, they're still at a pretty high level, so we'd like to see them fall further if possible.
In Conclusion...
In summary, despite lower returns in the short term, we're encouraged to see that PNC Process Systems is reinvesting for growth and has higher sales as a result. And the stock has followed suit returning a meaningful 90% to shareholders over the last five years. So should these growth trends continue, we'd be optimistic on the stock going forward.
Like most companies, PNC Process Systems does come with some risks, and we've found 2 warning signs that you should be aware of.
While PNC Process Systems 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.
如果我们想找到潜在的多功能玩家,通常有潜在的趋势可以提供线索。理想情况下,企业将呈现两种趋势;首先是增长 返回 论资本使用率(ROCE),其次是增加 金额 已动用资本的百分比。基本上,这意味着一家公司有可以继续进行再投资的盈利计划,这是复合机的一个特征。但是,当我们查看 PNC Process Systems(SHSE: 603690)时,它似乎并没有勾选所有这些方框。
因此,PNC Process Systems的投资回报率为5.4%。从绝对值来看,这是一个很低的回报,但约为机械行业的平均水平6.1%。
查看我们对 PNC 过程系统的最新分析
SHSE: 603690 2023 年 12 月 19 日已动用资本回报率
在上方你可以看到PNC Process Systems当前的投资回报率与其先前的资本回报率相比如何,但从过去可以看出来只有这么多。如果您想了解分析师对未来的预测,则应查看我们的PNC Process Systems免费报告。
PNC 工艺系统的 ROCE 趋势告诉我们什么?
不幸的是,这种趋势并不理想,投资回报率从五年前的12%下降,而资本使用量增长了1,229%。话虽如此,PNC Process Systems在最新业绩公布之前筹集了一些资金,因此这可以部分解释所用资本的增加。PNC Process Systems可能尚未从其筹集的新资金中获得整整一年的收益,因此应该对这些数字持保留态度。此外,我们发现PNC Process Systems的最新息税前收益数字与去年大致相同,因此我们将投资回报率的下降主要归因于筹资。
顺便说一句,PNC Process Systems在将其流动负债偿还至总资产的42%方面做得很好。因此,我们可以将其中一些与投资回报率的下降联系起来。更重要的是,这可以降低业务风险的某些方面,因为现在该公司的供应商或短期债权人为其运营提供的资金减少了。由于该企业基本上是用自己的资金为更多的业务提供资金,你可以说这降低了企业创造投资回报的效率。不管怎样,它们仍然处于相当高的水平,因此,如果可能的话,我们希望看到它们进一步下降。
总之...
总而言之,尽管短期内回报率较低,但令我们感到鼓舞的是,PNC Process Systems正在进行再投资以促进增长,从而实现了更高的销售额。在过去五年中,该股紧随其后,为股东带来了可观的90%的回报。因此,如果这些增长趋势持续下去,我们将对该股的未来持乐观态度。
像大多数公司一样,PNC Process Systems确实存在一些风险,我们发现了两个警告信号,你应该注意。
尽管PNC Process Systems的回报率不是最高的,但请查看这份免费清单,列出了资产负债表稳健且股本回报率高的公司。