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9 minutes ago
- Yahoo
The Return Trends At Kinatico (ASX:KYP) Look Promising
What are the early trends we should look for to identify a stock that could 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. Speaking of which, we noticed some great changes in Kinatico's (ASX:KYP) returns on capital, so let's have a look. 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. Understanding Return On Capital Employed (ROCE) 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. The formula for this calculation on Kinatico is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.034 = AU$919k ÷ (AU$33m - AU$6.6m) (Based on the trailing twelve months to December 2024). Thus, Kinatico has an ROCE of 3.4%. In absolute terms, that's a low return and it also under-performs the IT industry average of 5.7%. Check out our latest analysis for Kinatico In the above chart we have measured Kinatico's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Kinatico . What Can We Tell From Kinatico's ROCE Trend? The fact that Kinatico is now generating some pre-tax profits from its prior investments is very encouraging. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 3.4% on its capital. In addition to that, Kinatico is employing 282% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns. In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 20%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. Therefore we can rest assured that the growth in ROCE is a result of the business' fundamental improvements, rather than a cooking class featuring this company's books. The Bottom Line To the delight of most shareholders, Kinatico has now broken into profitability. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence. One more thing, we've spotted 2 warning signs facing Kinatico that you might find interesting. While Kinatico 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) 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
9 minutes ago
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Should You Buy Opendoor Technologies (OPEN) Stock Before Aug. 5? Here's What History Says.
Key Points Opendoor Technologies has recently benefited from meme-stock momentum, and the company is gearing up for its Q2 report on Aug. 5. Opendoor has historically seen high levels of valuation volatility following its earnings reports. Factors outside of sales and earnings performance could continue to play big roles in Opendoor's near-term stock performance. 10 stocks we like better than Opendoor Technologies › Opendoor Technologies (NASDAQ: OPEN) stock has taken investors on a wild ride recently, and it has a big test coming up on the near horizon. The company will report its second-quarter report after the market closes on Aug. 5, and results in the period could spur a huge valuation swing for the real estate services specialist. Opendoor's share price has recently surged thanks to the company becoming a new favorite among meme-stock traders, and it's still up more than 280% over the last month despite pulling back a bit from its recent high. With the company's Q2 report on deck, investors may be wondering whether buying into the stock ahead of earnings is a good move. Take a look at the chart below for a snapshot of the stock's historical performance following its quarterly reports. Opendoor stock has been highly volatile after earnings Opendoor has historically seen a high level of valuation volatility following its earnings reports. While the company has seen some instances in which its quarterly reports helped power huge gains for its stock, its reports have more frequently corresponded with substantial sell-offs. Despite its recent meme-stock surge, the company's share price is still down 12.5% over the last year. Shares are also down roughly 81% over the last five years of trading. Opendoor's recent valuation gains have largely been driven by its newfound meme-stock status and appear to be mostly divorced from any fundamental improvements for the business or its outlook. The gains caused the company to delay the vote on a reverse stock split that could have been needed to keep the stock above the $1 per share level needed to remain listed on the Nasdaq stock exchange, but it remains to be seen if its recent surge will hold. Historically, Opendoor stock has not been a great performer following the company's earnings reports. On the other hand, that doesn't provide a clear indication about how the stock will perform after its next report -- and unpredictability has only been heightened by the company's status as a meme stock. Is Opendoor poised for another big post-earnings valuation move? With a forward price-to-sales (P/S) ratio of roughly 0.3, Opendoor is valued at just 30% of this year's expected sales. The company's still relatively modest forward P/S ratio does potentially open the door for explosive gains and has helped to make its shares attractive to meme-stock traders. With its last quarterly update, Opendoor guided for sales between $1.45 billion and $1.525 billion in the second quarter. The company also guided for a contribution profit between $65 million and $75 million, and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) between $10 million and $20 million. Given recent meme momentum surrounding the stock, it's possible that even relatively small performance beats could power big valuation gains for the company after its Q2 results are published. On the other hand, there are some key factors outside of sales and earnings performance for the quarter that could shape trading in the near term. With Opendoor stock having gotten a big boost from meme-related trading, management may want to seize the opportunity to sell new stock at its current elevated levels in order to raise funds and strengthen the company's balance sheet. Selling new shares could create a substantial source of new capital for the company and be a smart long-term move, but share dilution could burst Opendoor's meme momentum and lead to big sell-offs for the stock. So while there's no way of knowing exactly which way the stock will head after earnings, there are good reasons to expect more big volatility in the near future. Should you invest $1,000 in Opendoor Technologies right now? Before you buy stock in Opendoor Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Opendoor Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Should You Buy Opendoor Technologies (OPEN) Stock Before Aug. 5? Here's What History Says. was originally published by The Motley Fool 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
Yahoo
9 minutes ago
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Should You Buy Sirius XM Stock After Earnings?
Key Points Sirius XM's self-pay subscriber base shrank, leading to a revenue decline in Q2. This business generates lots of free cash flow, which should get a boost as capital expenditures come down. The stock is cheap, leading to a high dividend yield that income investors might find appealing. 10 stocks we like better than Sirius XM › Sirius XM (NASDAQ: SIRI) has received a lot of attention among the investment community. That's because Warren Buffett-led Berkshire Hathaway is a large shareholder, owning 35.4% of the satellite radio operator. Nonetheless, this stock has tanked 64% just in the past five years (as of July 31). Sirius XM just gave investors a fresh financial update. Given that the share price fell 8% the day the news was reported, the market clearly isn't happy with the numbers. Maybe there's an opportunity here for contrarian investors. Should you buy Sirius XM stock after earnings? Growth is hard to come by During the second quarter (ended June 30), Sirius XM's revenue dipped 2% from Q2 2024 to $2.1 billion. That was driven by a declining user base. As of June 30, there were 32.8 million paid Sirius XM subscribers, down by 460,000 over the past year. For what it's worth, Sirius XM doesn't face direct competition from any other satellite radio providers, as this is the only one that's legally allowed in the U.S. And to its benefit, the company generated 76.2% of its revenue from subscriptions in Q2, compared to a 20.2% share from advertising. This is advantageous because the sales coming from subscriptions are recurring in nature and likely more durable, whereas ad revenue can exhibit cyclicality that's influenced by macro forces. There is no denying that Sirius XM will have a hard time registering growth going forward. Consensus analyst estimates call for revenue to decline at a 0.7% annualized rate between 2024 and 2027. The key factor that has had a huge negative impact on the company is the rise of internet-enabled streaming services. Apple, Spotify, and Alphabet's YouTube all give consumers compelling options for audio entertainment. Free cash flow remains robust Even though the company will undoubtedly struggle to grow its subscriber base and revenue going forward, Sirius XM doesn't have any issue when it comes to profitability. Although diluted earnings per share did drop 23% in Q2, the business had a net profit margin of 9.6% for the quarter. Management is focused on cost-cutting efforts. The goal is to get to $200 million in annual run-rate expense reductions. That could help with the bottom line. Sirius XM generated $402 million in free cash flow (FCF) during the second quarter, up 27%. Capital expenditures will continue decreasing in the years ahead. So, management's outlook has FCF totaling $1.5 billion in 2027. That would represent a 30.4% gain from the forecast $1.15 billion for this year. The leadership team has allocated this excess cash to the benefit of investors. Sirius XM repurchased $45 million worth of shares in Q2. Compared to the same period last year, the diluted outstanding share count has shrunk by a notable 5.6%. Appealing to dividend investors Another key part of Sirius XM's capital allocation plan is to pay a dividend, which totaled $92 million in Q2. Because the stock's valuation is dirt cheap, at a price-to-earnings (P/E) ratio of 8.1, the dividend yield sits at a hefty 5.11%. Investors can find comfort knowing that legendary investor Warren Buffett is a big shareholder in this company. He knows how to pick winning investments, so maybe the Oracle of Omaha sees something in Sirius XM. However, I think individual investors are better off avoiding this stock. Yes, the business is consistently profitable. The low P/E ratio is compelling, and the dividend yield can provide a nice income stream. But with there being intense competition from powerful streaming services, Sirius XM is facing a headwind when it comes to driving any growth. It wouldn't be surprising to see the company shrink over time. Should you buy stock in Sirius XM right now? Before you buy stock in Sirius XM, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Sirius XM wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Spotify Technology. The Motley Fool has a disclosure policy. Should You Buy Sirius XM Stock After Earnings? was originally published by The Motley Fool Sign in to access your portfolio
