Returns On Capital Signal Tricky Times Ahead For Homeritz Corporation Berhad (KLSE:HOMERIZ)
What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. In light of that, when we looked at Homeritz Corporation Berhad (KLSE:HOMERIZ) and its ROCE trend, we weren't exactly thrilled.
AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Homeritz Corporation Berhad:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.12 = RM36m ÷ (RM331m - RM29m) (Based on the trailing twelve months to February 2025).
Therefore, Homeritz Corporation Berhad has an ROCE of 12%. In absolute terms, that's a satisfactory return, but compared to the Consumer Durables industry average of 4.4% it's much better.
Check out our latest analysis for Homeritz Corporation Berhad
Above you can see how the current ROCE for Homeritz Corporation Berhad compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Homeritz Corporation Berhad .
In terms of Homeritz Corporation Berhad's historical ROCE movements, the trend isn't fantastic. Around five years ago the returns on capital were 17%, but since then they've fallen to 12%. 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. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.
In summary, despite lower returns in the short term, we're encouraged to see that Homeritz Corporation Berhad is reinvesting for growth and has higher sales as a result. And the stock has followed suit returning a meaningful 56% to shareholders over the last five years. So should these growth trends continue, we'd be optimistic on the stock going forward.
If you want to continue researching Homeritz Corporation Berhad, you might be interested to know about the 2 warning signs that our analysis has discovered.
While Homeritz Corporation Berhad 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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Entrepreneur
40 minutes ago
- Entrepreneur
Credgenics Posts 40% Revenue Growth for FY24–25; Eyes Global Expansion
With its tools now handling collections across retail, SME, and MSME portfolios, Credgenics says it has helped lenders significantly cut costs while boosting recovery rates You're reading Entrepreneur India, an international franchise of Entrepreneur Media. Credgenics, a SaaS-based debt resolution platform, reported a 40 per cent increase in annual revenue for FY 2024–25, pushing total earnings to INR 220 crore. The company also logged a profit before tax of INR 25 crore, reinforcing its position as a dominant player in the debt collections technology sector. According to a press release from the company, the performance reflects growing demand for digital-first, AI-powered solutions in a financial landscape grappling with scale and efficiency challenges. With its tools now handling collections across retail, SME, and MSME portfolios, Credgenics says it has helped lenders significantly cut costs while boosting recovery rates. The announcement also comes as Credgenics signals broader ambitions beyond India. "We plan to further expand our presence both in India and other geographical locations, including the South East Asia and Middle East," said Rishabh Goel, co-founder and CEO. "With our revenue growing consistently at a high pace with sustained profitability, we have reinforced our dominant market leadership in this space." Goel emphasized the company's intention to push deeper into AI, especially Generative AI, to improve customer engagement and further automate collections. "Our goal is to continue delivering superior business value through our AI powered innovative platform while enhancing the experience for credit consumers," he said. Anand Agrawal, co-founder and CPTO, added that the company's growth is being driven by customer demand for end-to-end solutions that simplify the collections process. "Over the past year, we have scaled our platform and added new capabilities to meet the growing aspirational requirements of our customers," he said. "We remain focused on providing excellence with innovation as we further expand our customer base while providing unique solutions for new and diverse business use cases." Credgenics' platform integrates tools like AI-based collections strategy prediction, digital payments, litigation management, and multichannel communication. Its use of technologies like predictive dialers, Gen AI-powered voicebots and videos, and an online dispute resolution system reflects the industry's shift toward automation and data-driven decision-making. The company is backed by firms like WestBridge Capital, Accel, and Beams Fintech Fund.
Yahoo
3 hours ago
- Yahoo
Those who invested in Tesco (LON:TSCO) three years ago are up 74%
One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, the Tesco PLC (LON:TSCO) share price is up 53% in the last three years, clearly besting the market return of around 11% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 32% in the last year, including dividends. With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. During three years of share price growth, Tesco achieved compound earnings per share growth of 6.9% per year. This EPS growth is lower than the 15% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It is quite common to see investors become enamoured with a business, after a few years of solid progress. You can see how EPS has changed over time in the image below (click on the chart to see the exact values). It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Tesco's earnings, revenue and cash flow. As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Tesco, it has a TSR of 74% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments! It's nice to see that Tesco shareholders have received a total shareholder return of 32% over the last year. Of course, that includes the dividend. That's better than the annualised return of 16% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Tesco better, we need to consider many other factors. For instance, we've identified 1 warning sign for Tesco that you should be aware of. Tesco is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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.
Yahoo
3 hours ago
- Yahoo
Here's Why We Think Bytes Technology Group (LON:BYIT) Is Well Worth Watching
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad. In contrast to all that, many investors prefer to focus on companies like Bytes Technology Group (LON:BYIT), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Bytes Technology Group with the means to add long-term value to shareholders. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Bytes Technology Group has grown EPS by 18% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming. Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Bytes Technology Group shareholders can take confidence from the fact that EBIT margins are up from 27% to 31%, and revenue is growing. That's great to see, on both counts. The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart. Check out our latest analysis for Bytes Technology Group In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Bytes Technology Group's forecast profits? It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right. It's good to see Bytes Technology Group insiders walking the walk, by spending UK£155k on shares in just twelve months. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. It is also worth noting that it was Independent Non-Executive Director Anna Persson who made the biggest single purchase, worth UK£50k, paying UK£5.49 per share. Recent insider purchases of Bytes Technology Group stock is not the only way management has kept the interests of the general public shareholders in mind. Specifically, the CEO is paid quite reasonably for a company of this size. The median total compensation for CEOs of companies similar in size to Bytes Technology Group, with market caps between UK£739m and UK£2.4b, is around UK£1.8m. The Bytes Technology Group CEO received UK£978k in compensation for the year ending February 2025. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense. For growth investors, Bytes Technology Group's raw rate of earnings growth is a beacon in the night. To add to the positives, Bytes Technology Group has recorded instances of insider buying and a modest executive pay to boot. The overriding message from this quick rundown is yes, this stock is worth investigating further. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Bytes Technology Group , and understanding it should be part of your investment process. There are plenty of other companies that have insiders buying up shares. So if you like the sound of Bytes Technology Group, you'll probably love this curated collection of companies in GB that have an attractive valuation alongside insider buying in the last three months. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
