Returns On Capital At GEN Restaurant Group (NASDAQ:GENK) Paint A Concerning Picture
We've discovered 2 warning signs about GEN Restaurant Group. View them for free.
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. The formula for this calculation on GEN Restaurant Group is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.0024 = US$476k ÷ (US$240m - US$41m) (Based on the trailing twelve months to December 2024).
So, GEN Restaurant Group has an ROCE of 0.2%. In absolute terms, that's a low return and it also under-performs the Hospitality industry average of 10.0%.
Check out our latest analysis for GEN Restaurant Group
Above you can see how the current ROCE for GEN Restaurant Group compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering GEN Restaurant Group for free.
In terms of GEN Restaurant Group's historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 27% over the last five years. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance.
While returns have fallen for GEN Restaurant Group in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. However, despite the promising trends, the stock has fallen 53% over the last year, so there might be an opportunity here for astute investors. So we think it'd be worthwhile to look further into this stock given the trends look encouraging.
Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 2 warning signs for GEN Restaurant Group (of which 1 doesn't sit too well with us!) that you should know about.
While GEN Restaurant 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.
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A Trump administration spokesperson didn't return my request for comment. Sign in to access your portfolio
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- Forbes
China Market Update: Xiaomi's Results Roar (Quietly) As Hong Kong & Mainland China Take A Breather
Xiaomi fell by -1.23% in Hong Kong trading but reported earnings after the market's close. Xpeng fell by -1.85% in Hong Kong trading. A bigger piece of news after the close was that the Ministry of Industry and Information Technology (MIIT) held a symposium on competition in the solar industry, highlighting efforts to standardize competition and promote the orderly exit of outdated production capacity. The MIIT will strengthen price monitoring and enforcement against practices such as sales below cost and false advertising. It will be interesting to watch how US-listed China solar stocks respond, as this could affect Hong Kong and Mainland markets tomorrow. Asian equities were mixed as Vietnam gained 1%, Hong Kong closed lower for the fourth consecutive day, and Mainland China took a breather after its market cap hit a 10-year high . Profit taking centered on growth stocks and sub-sectors, but Tencent (+0.94%) and electronics held up well, aided by Premier Li's positive comments on domestic consumption. East Buy Holding was a notable decliner, dropping -20.89% in Hong Kong and -3.41% in Mainland China after reaching 52-week highs yesterday, reportedly on an unconfirmed rumor. Meanwhile, Mainland investors bought the Hong Kong dip in volume, with $2.38 billion in net buying, and strong flows into the Hong Kong Tracker ETF following Friday's $4.58 billion of net buying. The 1 and 3-Year Loan Prime Rates (LPRs), set at 3% and 3.5% respectively, are not expected to change; the 3-year rate remains the reference rate for mortgages. Diplomatic relations between India and China seem to be improving, as China has agreed to sell rare earths to India following Foreign Minister Wang Yi's visit. Having returned from a family holiday, I'm still shaking off the proverbial mental fog, although my wife insists that's a permanent state, and she's got plenty of evidence, too. I missed that Tong Cheng Travel reported Q2 financial results yesterday after the Hong Kong close, posting beats in revenue, adjusted net income, and adjusted earnings per share (EPS). It is worth noting that 2020 revenue was RMB 5.93 billion, and the 2025 revenue estimate is RMB 19.51 billion, yet the stock has only risen 35% over the past five years. This is fairly typical in our space, where revenues multiply but stock appreciation lags. New Content Read our latest article: Labubus: How Pop Mart's Newest Craze Reflects Chinese Cultural Influence in the U.S. Please click here to read
