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Yahoo
29-07-2025
- Business
- Yahoo
Is WTEC Group Berhad's (KLSE:WTEC) ROE Of 25% Impressive?
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like to learn about Return On Equity (ROE) and why it is important. To keep the lesson grounded in practicality, we'll use ROE to better understand WTEC Group Berhad (KLSE:WTEC). Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Put another way, it reveals the company's success at turning shareholder investments into profits. 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. How To Calculate Return On Equity? The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for WTEC Group Berhad is: 25% = RM8.2m ÷ RM33m (Based on the trailing twelve months to December 2024). The 'return' refers to a company's earnings over the last year. That means that for every MYR1 worth of shareholders' equity, the company generated MYR0.25 in profit. Check out our latest analysis for WTEC Group Berhad Does WTEC Group Berhad Have A Good ROE? One simple way to determine if a company has a good return on equity is to compare it to the average for its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As you can see in the graphic below, WTEC Group Berhad has a higher ROE than the average (6.9%) in the Chemicals industry. That is a good sign. Bear in mind, a high ROE doesn't always mean superior financial performance. Especially when a firm uses high levels of debt to finance its debt which may boost its ROE but the high leverage puts the company at risk. How Does Debt Impact ROE? Most companies need money -- from somewhere -- to grow their profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. That will make the ROE look better than if no debt was used. Combining WTEC Group Berhad's Debt And Its 25% Return On Equity WTEC Group Berhad has a debt to equity ratio of just 0.047, which is very low. Its ROE is very impressive, and given only modest debt, this suggests the business is high quality. Conservative use of debt to boost returns is usually a good move for shareholders, though it does leave the company more exposed to interest rate rises. Conclusion Return on equity is one way we can compare its business quality of different companies. A company that can achieve a high return on equity without debt could be considered a high quality business. All else being equal, a higher ROE is better. But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. It is important to consider other factors, such as future profit growth -- and how much investment is required going forward. So you might want to take a peek at this data-rich interactive graph of forecasts for the company. Shop Top Mortgage Rates A quicker path to financial freedom Personalized rates in minutes Your Path to Homeownership Of course WTEC Group Berhad may not be the best stock to buy. So you may wish to see this free collection of other companies that have high ROE and low debt. 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
25-03-2025
- Business
- Yahoo
Investors Will Want Mestron Holdings Berhad's (KLSE:MESTRON) Growth In ROCE To Persist
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding 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. Speaking of which, we noticed some great changes in Mestron Holdings Berhad's (KLSE:MESTRON) returns on capital, so let's have a look. 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 Mestron Holdings Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.051 = RM8.2m ÷ (RM217m - RM55m) (Based on the trailing twelve months to December 2024). Thus, Mestron Holdings Berhad has an ROCE of 5.1%. On its own, that's a low figure but it's around the 5.8% average generated by the Metals and Mining industry. View our latest analysis for Mestron Holdings 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 Mestron Holdings Berhad. While in absolute terms it isn't a high ROCE, it's promising to see that it has been moving in the right direction. The data shows that returns on capital have increased substantially over the last five years to 5.1%. The amount of capital employed has increased too, by 131%. So we're very much inspired by what we're seeing at Mestron Holdings Berhad thanks to its ability to profitably reinvest capital. A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Mestron Holdings Berhad has. Since the stock has returned a staggering 270% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Mestron Holdings Berhad can keep these trends up, it could have a bright future ahead. On a separate note, we've found 2 warning signs for Mestron Holdings Berhad you'll probably want to know about. While Mestron Holdings Berhad 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
25-03-2025
- Business
- Yahoo
Investors Will Want Mestron Holdings Berhad's (KLSE:MESTRON) Growth In ROCE To Persist
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding 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. Speaking of which, we noticed some great changes in Mestron Holdings Berhad's (KLSE:MESTRON) returns on capital, so let's have a look. 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 Mestron Holdings Berhad is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.051 = RM8.2m ÷ (RM217m - RM55m) (Based on the trailing twelve months to December 2024). Thus, Mestron Holdings Berhad has an ROCE of 5.1%. On its own, that's a low figure but it's around the 5.8% average generated by the Metals and Mining industry. View our latest analysis for Mestron Holdings 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 Mestron Holdings Berhad. While in absolute terms it isn't a high ROCE, it's promising to see that it has been moving in the right direction. The data shows that returns on capital have increased substantially over the last five years to 5.1%. The amount of capital employed has increased too, by 131%. So we're very much inspired by what we're seeing at Mestron Holdings Berhad thanks to its ability to profitably reinvest capital. A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Mestron Holdings Berhad has. Since the stock has returned a staggering 270% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Mestron Holdings Berhad can keep these trends up, it could have a bright future ahead. On a separate note, we've found 2 warning signs for Mestron Holdings Berhad you'll probably want to know about. While Mestron Holdings Berhad 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
21-02-2025
- Business
- Yahoo
Some Investors May Be Worried About Sycal Ventures Berhad's (KLSE:SYCAL) Returns On Capital
What underlying fundamental trends can indicate that a company might be in decline? Typically, we'll see the trend of both return on capital employed (ROCE) declining and this usually coincides with a decreasing amount of capital employed. Trends like this ultimately mean the business is reducing its investments and also earning less on what it has invested. In light of that, from a first glance at Sycal Ventures Berhad (KLSE:SYCAL), we've spotted some signs that it could be struggling, so let's investigate. If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Sycal Ventures Berhad: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.026 = RM8.2m ÷ (RM484m - RM169m) (Based on the trailing twelve months to September 2024). Therefore, Sycal Ventures Berhad has an ROCE of 2.6%. Ultimately, that's a low return and it under-performs the Construction industry average of 11%. View our latest analysis for Sycal Ventures 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 Sycal Ventures Berhad. There is reason to be cautious about Sycal Ventures Berhad, given the returns are trending downwards. Unfortunately the returns on capital have diminished from the 4.2% that they were earning five years ago. And on the capital employed front, the business is utilizing roughly the same amount of capital as it was back then. Companies that exhibit these attributes tend to not be shrinking, but they can be mature and facing pressure on their margins from competition. If these trends continue, we wouldn't expect Sycal Ventures Berhad to turn into a multi-bagger. All in all, the lower returns from the same amount of capital employed aren't exactly signs of a compounding machine. Investors haven't taken kindly to these developments, since the stock has declined 15% from where it was five years ago. That being the case, unless the underlying trends revert to a more positive trajectory, we'd consider looking elsewhere. If you want to know some of the risks facing Sycal Ventures Berhad we've found 2 warning signs (1 doesn't sit too well with us!) that you should be aware of before investing here. While Sycal Ventures Berhad 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.
