Capital Allocation Trends At Kobay Technology Bhd (KLSE:KOBAY) Aren't Ideal
To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Having said that, from a first glance at Kobay Technology Bhd (KLSE:KOBAY) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.
Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.
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 Kobay Technology Bhd is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.051 = RM23m ÷ (RM610m - RM153m) (Based on the trailing twelve months to December 2024).
Thus, Kobay Technology Bhd has an ROCE of 5.1%. In absolute terms, that's a low return and it also under-performs the Machinery industry average of 8.2%.
Check out our latest analysis for Kobay Technology Bhd
Historical performance is a great place to start when researching a stock so above you can see the gauge for Kobay Technology Bhd's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Kobay Technology Bhd .
When we looked at the ROCE trend at Kobay Technology Bhd, we didn't gain much confidence. To be more specific, ROCE has fallen from 12% 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. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.
While returns have fallen for Kobay Technology Bhd in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. And the stock has done incredibly well with a 171% return over the last five years, so long term investors are no doubt ecstatic with that result. So while the underlying trends could already be accounted for by investors, we still think this stock is worth looking into further.
On a final note, we found 2 warning signs for Kobay Technology Bhd (1 makes us a bit uncomfortable) you should be aware of.
While Kobay Technology Bhd 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.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Wall Street Journal
36 minutes ago
- Wall Street Journal
GOP Senators' Competing Demands Risk Pulling Trump Megabill Apart
WASHINGTON—Senate Majority Leader John Thune (R., S.D.) is trying to release this week a revised version of President Trump's 'big, beautiful bill.' But as he races to pass the legislation ahead of Republicans' self-imposed July 4 deadline, he has got about as many problems as there are GOP senators, with lawmakers battling over the additional borrowing and spending cuts that will be used to finance tax relief, plus spending on the border and military.
Yahoo
an hour ago
- Yahoo
Speaker Johnson teases follow-ups to the ‘one big, beautiful bill'
The 'one big, beautiful bill' may not be so singular, after all. Speaker Mike Johnson (R-La.) is teasing follow-up legislation to the megabill of President Trump's tax cut and spending priorities that Republicans can push though using the same special budget reconciliation process that requires only GOP votes. That tool can be used once per fiscal year, with the current fiscal year ending on Sept. 30. So after Republicans are done with the 'big, beautiful bill,' the GOP trifecta has, in theory, two more shots to muscle through party-line legislation before the next Congress comes into power after the midterms. Johnson floated plans for a second reconciliation bill while rebutting concerns from deficit hawks on the budget impact of the One Big Beautiful Bill Act — which includes an extension of tax cuts and boosts to border and defense funding, with costs offset in part by new requirements on low-income assistance programs like Medicaid and food aid. 'Everyone here wants to reduce spending,' Johnson said Friday morning on CNBC. 'But you have to do that in a sequence of events. We have a plan, OK? This is the first of a multistep process.' 'We're going to have another reconciliation bill that follows this one, possibly a third one before this Congress is up, because you can have a reconciliation bill for each budget year, each fiscal year. So that's ahead of us,' Johnson continued, also pointing to separate plans to claw back money based on recommendations from the Department of Government Efficiency (DOGE). 'We're also doing rescissions packages. We got the first one delivered this week from the White House, and that will codify many of the DOGE cuts.' The promise of another reconciliation bill is somewhat surprising given the crux of the debate that dominated the early weeks of the year: Should Republicans divide up their agenda into two bills, passing the first quickly to give Trump an early win on boosting funding for border enforcement and deportations? Or would putting all of Trump's priorities into one bill — which would contain both bitter pills and sweeteners for different factions of the razor-thin majority — be a better political strategy? Trump eventually said he preferred 'one big, beautiful bill,' a moniker that became the legislation's official title in the House last month. It's not clear what would be in a second piece of legislation. Multiple House Republicans who spoke with The Hill were unaware of plans for more reconciliation bills and were not sure what could be included in them. 'I think we need to see what's left on the table after the first one,' Rep. Michael Cloud (R-Texas) said. And to muster through multiple reconciliation bills is a delicate prospect. If members know more reconciliation bills are coming, that complicates the argument that everything in the current package — even policies some factions dislike that others love — need to stay in one megabill. The Speaker declined to elaborate on what might be in such a package when asked in a press conference last week. 'I'm not going to tell you that,' Johnson said. 'Let's get the first one done.' 'Look, I say this is the beginning of a process, and what you're going to see is a continuing of us identifying waste, fraud, abuse in government, which is our pledge of common sense, restoring common sense and fiscal sanity. So we have lots of ideas of things that might be in that package.' Republicans had started planning for the current legislative behemoth months before the 2024 election so they would be prepared to quickly execute on their policy wish list if they won the majority. 'This isn't something we just drew up overnight. So, we'll go through that same laborious process,' Johnson said. But some members have ideas of what else they'd like to see. Rep. Ralph Norman (R-S.C.) said that he'd hope a second bill would do more to tackle rolling back green energy tax credits and make further spending cuts. Ultimately, though, it will be Trump's call, Norman said: 'I know when the president gets involved, it adds a lot of value.' And Rep. August Pfluger (R-Texas) speculated that passing the 'big, beautiful bill' would inspire members to keep going with another bill. 'People like the feeling of winning,' Pfluger said. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
an hour ago
- Yahoo
Top Republican Flames Musk for Pushing GOP ‘Off the Cliff'
Nebraska GOP Rep. Don Bacon blamed billionaire Elon Musk for bankrolling the Republican party to a point of no return amid the former 'First Buddy's' very public spat with President Donald Trump. Bacon—who has publicly opposed Trump's handling of the Russia-Ukraine war, tariffs, Signalgate, and cuts to the United States Agency for International Development—told the New York Times he refuses to follow his party 'off the cliff' and into oblivion. Bacon pointed the finger at Musk for using his money to muscle his way into politics, saying the Tesla CEO used his financial hold over Republicans to tank a bipartisan spending bill that would have averted a government shutdown in December. 'I sort of blame him for that disaster,' Bacon, 61, said. Bacon was the sole House Republican to vote 'no' on renaming the Gulf of Mexico to the Gulf of America. However, he did vote 'yes' to shuffle Trump's 'big beautiful bill' to its next phase. Upon voting, Bacon announced that the bill, though 'not perfect,' 'delivers for Nebraskans.' 'I don't like voting 'no,'' Bacon said. 'I like fixing things.' He added that he does what Trump 'has done' at the Southern Border. 'I have no problem with that,' he said. With Musk on the outs with Trump, Bacon said it's an opportunity to 'fight for the soul of our party,' 'I don't want to be the guy who follows the flute player off the cliff. I think that's what's going on right now,' Bacon said, comparing his numerous breaks from party lines to Winston Churchill condemning Adolf Hitler in the 1930s. Bacon added, 'Winston Churchill, who is one of my heroes, he was very unpopular 1932 through '40 because he was anti-Nazi. But in 1940, they go, 'Who was the only guy that knew what was going on?'' Shooting down any talk of campaigning to take the top job for himself as president, Bacon instead put the buzz out that he'd like to go into intelligence. 'If I had a perfect lane, someday I'd love to work in an administration as director of intelligence or secretary of Defense or Air Force,' he said. He added, 'I'd rather go down in history as being on the right side of this stuff.' The Daily Beast has reached out to Elon Musk for comment on Bacon's remarks.
