What are the basic trends to look for if you want to find stocks with long-term growth potential? return Increased capital employed (ROCE) and, secondly, expanding base of capital used. Essentially, this means that companies have profitable initiatives that they can continue to reinvest. This is a feature of the compound interest calculator. However, as a result of investigation, SEG International Bhd (KLSE:SEG), I think the current trend doesn’t fit the mold of multibaggers.
What is Return on Capital Employed (ROCE)?
To clarify if you’re not sure, ROCE is a metric used to assess how much pre-tax profit (as a percentage) a company earns for the capital invested in its business. The formula for this SEG International Bhd is:
Return on Capital Employed = Earnings Before Interest and Taxes (EBIT) ÷ (Total Assets – Current Liabilities)
0.19 = RM50m ÷ (RM382m – RM125m) (Based on the last 12 months to September 2022).
therefore, SEG International Bhd has a ROCE of 19%. A satisfying return in absolute terms, but far better than the consumer service industry average of 4.1%.
Check out the latest analysis of SEG International Bhd
The past isn’t representative of the future, but it’s helpful to know how the company has performed historically. If you would like to see how SEG International Bhd has performed in the past against other metrics, please visit here. freedom Graphs of historical earnings, earnings and cash flow.
What is the return trend?
On the surface, SEG International Bhd’s ROCE trend does not inspire confidence. About five years ago his return on capital was 25%, and since then he has dropped to 19%. On the other hand, the business is utilizing more capital, but this has not had a significant impact on sales over the past 12 months, which may reflect long-term investments. It’s worth keeping an eye on the company’s earnings going forward to see if these investments ultimately contribute to earnings.
In summary, SEG International Bhd is reinvesting funds back into the business for growth, but unfortunately it seems that sales are still not growing very much. Shareholders are also aware of this lackluster trend, as only 24% has been returned to shareholders over the past five years. So if you’re looking for a multi-bagger, the underlying trend points to better chances elsewhere.
If you would like to know about the risks facing SEG International Bhd, 1 warning sign What you should know.
SEG International Bhd may not be the most profitable right now, but we’ve put together a list of companies that currently have a return on equity of 25% or more.check this out freedom I’ll list them here.
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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …
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