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Returns On Capital Signal Tricky Times Ahead For TMC Life Sciences Berhad (KLSE:TMCLIFE)
Returns On Capital Signal Tricky Times Ahead For TMC Life Sciences Berhad (KLSE:TMCLIFE)

Yahoo

time04-05-2025

  • Business
  • Yahoo

Returns On Capital Signal Tricky Times Ahead For TMC Life Sciences Berhad (KLSE:TMCLIFE)

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Having said that, from a first glance at TMC Life Sciences Berhad (KLSE:TMCLIFE) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper 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. For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for TMC Life Sciences Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.02 = RM21m ÷ (RM1.1b - RM107m) (Based on the trailing twelve months to December 2024). Therefore, TMC Life Sciences Berhad has an ROCE of 2.0%. In absolute terms, that's a low return and it also under-performs the Healthcare industry average of 9.9%. View our latest analysis for TMC Life Sciences 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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of TMC Life Sciences Berhad. On the surface, the trend of ROCE at TMC Life Sciences Berhad doesn't inspire confidence. Around five years ago the returns on capital were 4.1%, but since then they've fallen to 2.0%. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line. To conclude, we've found that TMC Life Sciences Berhad is reinvesting in the business, but returns have been falling. And in the last five years, the stock has given away 12% so the market doesn't look too hopeful on these trends strengthening any time soon. Therefore based on the analysis done in this article, we don't think TMC Life Sciences Berhad has the makings of a multi-bagger. If you want to continue researching TMC Life Sciences Berhad, you might be interested to know about the 2 warning signs that our analysis has discovered. While TMC Life Sciences 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.

Ibraco Berhad's (KLSE:IBRACO) Profits May Not Reveal Underlying Issues
Ibraco Berhad's (KLSE:IBRACO) Profits May Not Reveal Underlying Issues

Yahoo

time05-04-2025

  • Business
  • Yahoo

Ibraco Berhad's (KLSE:IBRACO) Profits May Not Reveal Underlying Issues

Ibraco Berhad's (KLSE:IBRACO) robust recent earnings didn't do much to move the stock. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers. 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. In high finance, the key ratio used to measure how well a company converts reported profits into free cash flow (FCF) is the accrual ratio (from cashflow). The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. This ratio tells us how much of a company's profit is not backed by free cashflow. That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. Notably, there is some academic evidence that suggests that a high accrual ratio is a bad sign for near-term profits, generally speaking. Ibraco Berhad has an accrual ratio of 0.21 for the year to December 2024. Unfortunately, that means its free cash flow fell significantly short of its reported profits. In the last twelve months it actually had negative free cash flow, with an outflow of RM107m despite its profit of RM48.8m, mentioned above. Coming off the back of negative free cash flow last year, we imagine some shareholders might wonder if its cash burn of RM107m, this year, indicates high risk. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. Ibraco Berhad's accrual ratio for the last twelve months signifies cash conversion is less than ideal, which is a negative when it comes to our view of its earnings. Because of this, we think that it may be that Ibraco Berhad's statutory profits are better than its underlying earnings power. But on the bright side, its earnings per share have grown at an extremely impressive rate over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Our analysis shows 3 warning signs for Ibraco Berhad (2 are potentially serious!) and we strongly recommend you look at them before investing. This note has only looked at a single factor that sheds light on the nature of Ibraco Berhad's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. 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

LFE Corporation Berhad's (KLSE:LFECORP) Stock Has Been Sliding But Fundamentals Look Strong: Is The Market Wrong?
LFE Corporation Berhad's (KLSE:LFECORP) Stock Has Been Sliding But Fundamentals Look Strong: Is The Market Wrong?

Yahoo

time04-04-2025

  • Business
  • Yahoo

LFE Corporation Berhad's (KLSE:LFECORP) Stock Has Been Sliding But Fundamentals Look Strong: Is The Market Wrong?

It is hard to get excited after looking at LFE Corporation Berhad's (KLSE:LFECORP) recent performance, when its stock has declined 21% over the past three months. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Specifically, we decided to study LFE Corporation Berhad's ROE in this article. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. Simply put, it is used to assess the profitability of a company in relation to its equity capital. 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. Return on equity can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for LFE Corporation Berhad is: 24% = RM25m ÷ RM107m (Based on the trailing twelve months to December 2024). The 'return' is the income the business earned over the last year. One way to conceptualize this is that for each MYR1 of shareholders' capital it has, the company made MYR0.24 in profit. View our latest analysis for LFE Corporation Berhad We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. Firstly, we acknowledge that LFE Corporation Berhad has a significantly high ROE. Secondly, even when compared to the industry average of 8.5% the company's ROE is quite impressive. As a result, LFE Corporation Berhad's exceptional 56% net income growth seen over the past five years, doesn't come as a surprise. As a next step, we compared LFE Corporation Berhad's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 15%. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. This then helps them determine if the stock is placed for a bright or bleak future. Is LFE Corporation Berhad fairly valued compared to other companies? These 3 valuation measures might help you decide. LFE Corporation Berhad doesn't pay any regular dividends currently which essentially means that it has been reinvesting all of its profits into the business. This definitely contributes to the high earnings growth number that we discussed above. In total, we are pretty happy with LFE Corporation Berhad's performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. If the company continues to grow its earnings the way it has, that could have a positive impact on its share price given how earnings per share influence long-term share prices. Not to forget, share price outcomes are also dependent on the potential risks a company may face. So it is important for investors to be aware of the risks involved in the business. To know the 2 risks we have identified for LFE Corporation Berhad visit our risks dashboard for free. 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.

ViTrox Corporation Berhad (KLSE:VITROX) Will Want To Turn Around Its Return Trends
ViTrox Corporation Berhad (KLSE:VITROX) Will Want To Turn Around Its Return Trends

Yahoo

time23-03-2025

  • Business
  • Yahoo

ViTrox Corporation Berhad (KLSE:VITROX) Will Want To Turn Around Its Return Trends

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. However, after investigating ViTrox Corporation Berhad (KLSE:VITROX), we don't think it's current trends fit the mold of a multi-bagger. 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 ViTrox Corporation Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.10 = RM107m ÷ (RM1.2b - RM148m) (Based on the trailing twelve months to December 2024). Therefore, ViTrox Corporation Berhad has an ROCE of 10%. In absolute terms, that's a satisfactory return, but compared to the Semiconductor industry average of 5.5% it's much better. See our latest analysis for ViTrox Corporation Berhad In the above chart we have measured ViTrox Corporation Berhad's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering ViTrox Corporation Berhad for free. When we looked at the ROCE trend at ViTrox Corporation Berhad, we didn't gain much confidence. Around five years ago the returns on capital were 31%, but since then they've fallen to 10%. Meanwhile, the business is utilizing more capital but this hasn't moved the needle much in terms of sales in the past 12 months, so this could reflect longer term investments. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line. In summary, ViTrox Corporation Berhad is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. Since the stock has gained an impressive 60% over the last five years, investors must think there's better things to come. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high. If you're still interested in ViTrox Corporation Berhad it's worth checking out our to see if it's trading at an attractive price in other respects. For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and 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. Sign in to access your portfolio

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