Latest news with #MorganAdvancedMaterials'
Yahoo
30-05-2025
- Business
- Yahoo
Investors Met With Slowing Returns on Capital At Morgan Advanced Materials (LON:MGAM)
What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after briefly looking over the numbers, we don't think Morgan Advanced Materials (LON:MGAM) has the makings of a multi-bagger going forward, but let's have a look at why that may be. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Morgan Advanced Materials, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.15 = UK£126m ÷ (UK£1.1b - UK£263m) (Based on the trailing twelve months to December 2024). So, Morgan Advanced Materials has an ROCE of 15%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Machinery industry average of 14%. View our latest analysis for Morgan Advanced Materials Above you can see how the current ROCE for Morgan Advanced Materials 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 Morgan Advanced Materials . There hasn't been much to report for Morgan Advanced Materials' returns and its level of capital employed because both metrics have been steady for the past five years. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect Morgan Advanced Materials to be a multi-bagger going forward. This probably explains why Morgan Advanced Materials is paying out 41% of its income to shareholders in the form of dividends. Given the business isn't reinvesting in itself, it makes sense to distribute a portion of earnings among shareholders. In a nutshell, Morgan Advanced Materials has been trudging along with the same returns from the same amount of capital over the last five years. And with the stock having returned a mere 9.9% in the last five years to shareholders, you could argue that they're aware of these lackluster trends. As a result, if you're hunting for a multi-bagger, we think you'd have more luck elsewhere. One more thing, we've spotted 3 warning signs facing Morgan Advanced Materials that you might find interesting. If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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. 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
30-05-2025
- Business
- Yahoo
Investors Met With Slowing Returns on Capital At Morgan Advanced Materials (LON:MGAM)
What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after briefly looking over the numbers, we don't think Morgan Advanced Materials (LON:MGAM) has the makings of a multi-bagger going forward, but let's have a look at why that may be. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Morgan Advanced Materials, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.15 = UK£126m ÷ (UK£1.1b - UK£263m) (Based on the trailing twelve months to December 2024). So, Morgan Advanced Materials has an ROCE of 15%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Machinery industry average of 14%. View our latest analysis for Morgan Advanced Materials Above you can see how the current ROCE for Morgan Advanced Materials 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 Morgan Advanced Materials . There hasn't been much to report for Morgan Advanced Materials' returns and its level of capital employed because both metrics have been steady for the past five years. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect Morgan Advanced Materials to be a multi-bagger going forward. This probably explains why Morgan Advanced Materials is paying out 41% of its income to shareholders in the form of dividends. Given the business isn't reinvesting in itself, it makes sense to distribute a portion of earnings among shareholders. In a nutshell, Morgan Advanced Materials has been trudging along with the same returns from the same amount of capital over the last five years. And with the stock having returned a mere 9.9% in the last five years to shareholders, you could argue that they're aware of these lackluster trends. As a result, if you're hunting for a multi-bagger, we think you'd have more luck elsewhere. One more thing, we've spotted 3 warning signs facing Morgan Advanced Materials that you might find interesting. If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.
Telegraph
28-03-2025
- Business
- Telegraph
Sometimes it's worth trying to catch a falling knife – this one offers growth and income
Questor is The Telegraph's stockpicking column, helping you decode the markets and offering insights on where to invest. Some investment adages are, quite simply, utter nonsense. For example, 'do not try to catch a falling knife' suggests investors should not purchase any stock that has fallen heavily. However, given that the underlying aim of stock market investing is to buy at a low price and subsequently sell at a much higher price, the advice seems to be woefully misguided. Moreover, by adhering to the adage, investors could end up only buying shares that have risen sharply. This means they are likely to pay an overly inflated price that provides little scope for capital growth, since the stock's upbeat future prospects may have already been factored in by their peers. Questor, of course, typically ignores the past performance of stocks when determining their investment appeal. As a result, the 27pc slump in Morgan Advanced Materials' share price over the past year does not preclude it from obtaining a 'buy' rating. The FTSE 250-listed company, which manufactures carbon and ceramic materials used in a variety of industries including healthcare and aerospace, has fallen out of favour with investors following its recently released annual results. They showed the company is experiencing a challenging operating environment, with weak demand in many of its markets. This contributed to a disappointing financial performance – revenue fell by 1.3pc. Although tough trading conditions may persist in the near term and could even worsen amid a global trade war, the long-term prospects for the business are upbeat. Interest rate cuts already enacted in several of its key markets, notably the US where 41pc of its sales are generated, have not yet had their full impact on economic growth due to the existence of time lags. With further monetary policy easing likely to be ahead, the company's operating environment should improve over the coming years. Despite reporting a declining top line, Morgan Advanced Materials' efficiency programme contributed to a 6.7pc increase in operating profits last year. Indeed, its operating profit margin rose by 90 basis points to 11.7pc. This figure is set to further rise by 80 basis points in the current year as additional cost reductions are realised. Morgan's profitability was also enhanced by price increases, which suggests it has a strong competitive position, a fact further evidenced by a return on equity figure of 15pc. This was achieved despite the company having a moderate net gearing ratio of 70pc. Net interest cover, meanwhile, was in excess of five during the year. As a result, it appears to have a solid financial position through which to overcome an uncertain economic period. The stock's recent decline means that it trades on a price-to-earnings ratio of 8.3. This indicates that it offers a wide margin of safety, with investors appearing to have already priced in the potential for further industry-related challenges over the short run. When combined with a forecast double-digit annualised increase in earnings over the next two years, it suggests the company is significantly undervalued. As well as offering capital growth potential, Morgan Advanced Materials has income investing appeal. Its shares yield 5.8pc, which is around 230 basis points higher than that of the wider mid-cap index, following their recent slump. With dividends covered a healthy 2.1 times by earnings, they also appear to be highly affordable. Certainly, dividend growth of 1.7pc last year was disappointing. It is also unlikely to keep pace with the company's bottom line increases over the coming years, since the firm is aiming to expand dividend cover to 2.5. However, given that its earnings are forecast to increase at a brisk pace over the next two years, the rate of growth in shareholder payouts is still likely to surpass inflation. As a result, Morgan Advanced Materials becomes the latest addition to our income portfolio. We will use cash generated from recent sales to fund its notional purchase. The stock has proved to be a disappointment since Questor tipped it as a 'buy' in March 2018. It has fallen by 34pc since then, underperforming the FTSE 250 by 36 percentage points. Given its uncertain near-term outlook, it would be unsurprising if share price volatility is elevated in the coming months. However, with a sound competitive position, a solid balance sheet and a low valuation, the company has long-term capital growth potential. Its improving operating outlook should also act as a positive catalyst on its financial performance, while a relatively high yield and dividend growth potential mean it has long-term income investing appeal.
