Latest news with #MachineryIndustry
Yahoo
02-06-2025
- Business
- Yahoo
Capital Allocation Trends At InnoTek (SGX:M14) Aren't Ideal
When it comes to investing, there are some useful financial metrics that can warn us when a business is potentially in trouble. Businesses in decline often have two underlying trends, firstly, a declining return on capital employed (ROCE) and a declining base of capital employed. This reveals that the company isn't compounding shareholder wealth because returns are falling and its net asset base is shrinking. On that note, looking into InnoTek (SGX:M14), we weren't too upbeat about how things were going. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. 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. To calculate this metric for InnoTek, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.012 = S$2.3m ÷ (S$263m - S$77m) (Based on the trailing twelve months to December 2024). Therefore, InnoTek has an ROCE of 1.2%. Ultimately, that's a low return and it under-performs the Machinery industry average of 4.4%. View our latest analysis for InnoTek Historical performance is a great place to start when researching a stock so above you can see the gauge for InnoTek's ROCE against it's prior returns. If you're interested in investigating InnoTek's past further, check out this free graph covering InnoTek's past earnings, revenue and cash flow. There is reason to be cautious about InnoTek, given the returns are trending downwards. To be more specific, the ROCE was 7.2% five years ago, but since then it has dropped noticeably. Meanwhile, capital employed in the business has stayed roughly the flat over the period. This combination can be indicative of a mature business that still has areas to deploy capital, but the returns received aren't as high due potentially to new competition or smaller margins. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on InnoTek becoming one if things continue as they have. In summary, it's unfortunate that InnoTek is generating lower returns from the same amount of capital. Investors must expect better things on the horizon though because the stock has risen 13% in the last five years. Either way, we aren't huge fans of the current trends and so with that we think you might find better investments elsewhere. One more thing: We've identified 2 warning signs with InnoTek (at least 1 which is significant) , and understanding them would certainly be useful. While InnoTek 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) 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. Sign in to access your portfolio
Yahoo
02-06-2025
- Business
- Yahoo
Capital Allocation Trends At InnoTek (SGX:M14) Aren't Ideal
When it comes to investing, there are some useful financial metrics that can warn us when a business is potentially in trouble. Businesses in decline often have two underlying trends, firstly, a declining return on capital employed (ROCE) and a declining base of capital employed. This reveals that the company isn't compounding shareholder wealth because returns are falling and its net asset base is shrinking. On that note, looking into InnoTek (SGX:M14), we weren't too upbeat about how things were going. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. 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. To calculate this metric for InnoTek, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.012 = S$2.3m ÷ (S$263m - S$77m) (Based on the trailing twelve months to December 2024). Therefore, InnoTek has an ROCE of 1.2%. Ultimately, that's a low return and it under-performs the Machinery industry average of 4.4%. View our latest analysis for InnoTek Historical performance is a great place to start when researching a stock so above you can see the gauge for InnoTek's ROCE against it's prior returns. If you're interested in investigating InnoTek's past further, check out this free graph covering InnoTek's past earnings, revenue and cash flow. There is reason to be cautious about InnoTek, given the returns are trending downwards. To be more specific, the ROCE was 7.2% five years ago, but since then it has dropped noticeably. Meanwhile, capital employed in the business has stayed roughly the flat over the period. This combination can be indicative of a mature business that still has areas to deploy capital, but the returns received aren't as high due potentially to new competition or smaller margins. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on InnoTek becoming one if things continue as they have. In summary, it's unfortunate that InnoTek is generating lower returns from the same amount of capital. Investors must expect better things on the horizon though because the stock has risen 13% in the last five years. Either way, we aren't huge fans of the current trends and so with that we think you might find better investments elsewhere. One more thing: We've identified 2 warning signs with InnoTek (at least 1 which is significant) , and understanding them would certainly be useful. While InnoTek 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) 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
Yahoo
01-06-2025
- Business
- Yahoo
Investors Will Want Zicom Group's (ASX:ZGL) Growth In ROCE To Persist
If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Zicom Group (ASX:ZGL) so let's look a bit deeper. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. 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 Zicom Group is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.083 = S$5.7m ÷ (S$169m - S$100m) (Based on the trailing twelve months to December 2024). Therefore, Zicom Group has an ROCE of 8.3%. Ultimately, that's a low return and it under-performs the Machinery industry average of 11%. View our latest analysis for Zicom Group While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating Zicom Group's past further, check out this free graph covering Zicom Group's past earnings, revenue and cash flow. Shareholders will be relieved that Zicom Group has broken into profitability. The company was generating losses five years ago, but has managed to turn it around and as we saw earlier is now earning 8.3%, which is always encouraging. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. So while we're happy that the business is more efficient, just keep in mind that could mean that going forward the business is lacking areas to invest internally for growth. Because in the end, a business can only get so efficient. For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. The current liabilities has increased to 59% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors. Given it's pretty high ratio, we'd remind investors that having current liabilities at those levels can bring about some risks in certain businesses. As discussed above, Zicom Group appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. And with a respectable 80% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. In light of that, we think it's worth looking further into this stock because if Zicom Group can keep these trends up, it could have a bright future ahead. If you want to know some of the risks facing Zicom Group we've found 4 warning signs (3 are significant!) that you should be aware of before investing here. While Zicom 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) 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
Yahoo
01-06-2025
- Business
- Yahoo
Investors Will Want Zicom Group's (ASX:ZGL) Growth In ROCE To Persist
If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Zicom Group (ASX:ZGL) so let's look a bit deeper. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. 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 Zicom Group is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.083 = S$5.7m ÷ (S$169m - S$100m) (Based on the trailing twelve months to December 2024). Therefore, Zicom Group has an ROCE of 8.3%. Ultimately, that's a low return and it under-performs the Machinery industry average of 11%. View our latest analysis for Zicom Group While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating Zicom Group's past further, check out this free graph covering Zicom Group's past earnings, revenue and cash flow. Shareholders will be relieved that Zicom Group has broken into profitability. The company was generating losses five years ago, but has managed to turn it around and as we saw earlier is now earning 8.3%, which is always encouraging. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. So while we're happy that the business is more efficient, just keep in mind that could mean that going forward the business is lacking areas to invest internally for growth. Because in the end, a business can only get so efficient. For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. The current liabilities has increased to 59% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors. Given it's pretty high ratio, we'd remind investors that having current liabilities at those levels can bring about some risks in certain businesses. As discussed above, Zicom Group appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. And with a respectable 80% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. In light of that, we think it's worth looking further into this stock because if Zicom Group can keep these trends up, it could have a bright future ahead. If you want to know some of the risks facing Zicom Group we've found 4 warning signs (3 are significant!) that you should be aware of before investing here. While Zicom 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) 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
Yahoo
01-06-2025
- Business
- Yahoo
There's Been No Shortage Of Growth Recently For Erdasan Group Berhad's (KLSE:ERDASAN) Returns On Capital
If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So on that note, Erdasan Group Berhad (KLSE:ERDASAN) looks quite promising in regards to its trends of return on capital. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Erdasan Group Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.10 = RM17m ÷ (RM191m - RM27m) (Based on the trailing twelve months to March 2025). Therefore, Erdasan Group Berhad has an ROCE of 10%. In absolute terms, that's a satisfactory return, but compared to the Machinery industry average of 7.5% it's much better. View our latest analysis for Erdasan Group Berhad While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Erdasan Group Berhad has performed in the past in other metrics, you can view this free graph of Erdasan Group Berhad's past earnings, revenue and cash flow. We're delighted to see that Erdasan Group Berhad is reaping rewards from its investments and is now generating some pre-tax profits. About five years ago the company was generating losses but things have turned around because it's now earning 10% on its capital. In addition to that, Erdasan Group Berhad is employing 166% more capital than previously which is expected of a company that's trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance. To the delight of most shareholders, Erdasan Group Berhad has now broken into profitability. However the stock is down a substantial 97% in the last five years so there could be other areas of the business hurting its prospects. In any case, we believe the economic trends of this company are positive and looking into the stock further could prove rewarding. Erdasan Group Berhad does have some risks though, and we've spotted 2 warning signs for Erdasan Group Berhad that you might be interested in. While Erdasan Group 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) 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. Sign in to access your portfolio
