To find a multi-bagger stock, what are the underlying trends we should look for in a business? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, 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. With that in mind, the ROCE of Jinduicheng Molybdenum (SHSE:601958) looks great, so lets see what the trend can tell us.
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 Jinduicheng Molybdenum is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.22 = CN¥3.6b ÷ (CN¥18b - CN¥1.6b) (Based on the trailing twelve months to September 2023).
Thus, Jinduicheng Molybdenum has an ROCE of 22%. In absolute terms that's a great return and it's even better than the Metals and Mining industry average of 6.2%.
Check out our latest analysis for Jinduicheng Molybdenum
SHSE:601958 Return on Capital Employed January 18th 2024
Above you can see how the current ROCE for Jinduicheng Molybdenum 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 Jinduicheng Molybdenum.
What Can We Tell From Jinduicheng Molybdenum's ROCE Trend?
Jinduicheng Molybdenum is showing promise given that its ROCE is trending up and to the right. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 744% over the last five years. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.
What We Can Learn From Jinduicheng Molybdenum's ROCE
As discussed above, Jinduicheng Molybdenum appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. Since the stock has returned a solid 68% to shareholders over the last five years, it's fair to say investors are beginning to recognize 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 more thing to note, we've identified 1 warning sign with Jinduicheng Molybdenum and understanding it should be part of your investment process.
If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets 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.
ビジネスにおいてマルチバッガー株を見つけるには、どのような基本的な傾向を探すべきでしょうか?通常、成長している資産利回り(ROCE)の傾向に加えて、増加している資産利用率の傾向に注目したいところです。それは利益を生み出して多額の再投資機会がある企業だということを意味しています。それを覚えておいて、金銅城穀(SHSE: 601958)のROCEは素晴らしいものになっており、傾向から何がわかるか見てみましょう。資本利回り(ROCE)とそれに伴う増加傾向に注目すると、マルチバッガー株を見つけることができます。いままでROCEを知らなかった場合、ROCEは事業で使用される資本から得られるリターン(税引前利益)を計測するものです。金銅城穀においては、その計算式は次の通りです。2013年9月までの過去12ヶ月ベースで、Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)は0.22 =CN ¥3. 6b ÷(CN ¥18b-CN ¥1. 6b)となります。そのため、金銅城穀のROCEは22%であり、業界平均の6.2%と比べれば、明らかに優れたリターンです。金銅城穀のROCEトレンドから何がわかるでしょうか?ROCEが右肩上がりになっていることは、金銅城穀に将来有望な企業となる可能性があるということです。
資本利回り(ROCE)とは何ですか?
それでは、ROCEを使ったことがない場合は、 'return on capital employed in its business' を計測するものであるということを示します。金銅城穀の場合、その計算式は次の通りです。
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
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。