Latest news with #Brambles'
Yahoo
28-04-2025
- Business
- Yahoo
Why The 21% Return On Capital At Brambles (ASX:BXB) Should Have Your Attention
Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. And in light of that, the trends we're seeing at Brambles' (ASX:BXB) look very promising so lets take a look. We've discovered 2 warning signs about Brambles. 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. To calculate this metric for Brambles, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.21 = US$1.3b ÷ (US$8.5b - US$2.5b) (Based on the trailing twelve months to December 2024). Thus, Brambles has an ROCE of 21%. That's a fantastic return and not only that, it outpaces the average of 11% earned by companies in a similar industry. View our latest analysis for Brambles In the above chart we have measured Brambles' 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 Brambles . Brambles' ROCE growth is quite impressive. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 53% over the last five years. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking. As discussed above, Brambles appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. Since the stock has returned a staggering 129% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue. If you'd like to know about the risks facing Brambles, we've discovered 2 warning signs that you should be aware of. If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity. 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
08-04-2025
- Business
- Yahoo
Do Brambles' (ASX:BXB) Earnings Warrant Your Attention?
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. So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Brambles (ASX:BXB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Brambles with the means to add long-term value to shareholders. 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. If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. We can see that in the last three years Brambles grew its EPS by 17% per year. That growth rate is fairly good, assuming the company can keep it up. Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Our analysis has highlighted that Brambles' revenue from operations did not account for all of their revenue last year, so our analysis of its margins might not accurately reflect the underlying business. While we note Brambles achieved similar EBIT margins to last year, revenue grew by a solid 2.5% to US$6.8b. That's a real positive. You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image. Check out our latest analysis for Brambles The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Brambles' future EPS 100% free. Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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. Not only did Brambles insiders refrain from selling stock during the year, but they also spent US$275k buying it. This is a good look for the company as it paints an optimistic picture for the future. It is also worth noting that it was Non-Executive Independent Director Cameron McIntyre who made the biggest single purchase, worth AU$156k, paying AU$19.45 per share. As previously touched on, Brambles is a growing business, which is encouraging. Not every business can grow its EPS, but Brambles certainly can. The eye-catcher here is the reecnt insider share acquisitions which are undoubtedly enough to entice some investors to keep watch for the future. What about risks? Every company has them, and we've spotted 2 warning signs for Brambles you should know about. The good news is that Brambles is not the only stock with insider buying. Here's a list of small cap, undervalued companies in AU with 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.
