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Yahoo
03-04-2025
- Business
- Yahoo
Versatile Creative Berhad's (KLSE:VERSATL) Stock Been Rising: Are Strong Financials Guiding The Market?
Versatile Creative Berhad's (KLSE:VERSATL) stock up by 3.7% over the past month. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Versatile Creative Berhad's ROE in this article. Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. 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. ROE 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 Versatile Creative Berhad is: 12% = RM11m ÷ RM90m (Based on the trailing twelve months to December 2024). The 'return' is the income the business earned over the last year. Another way to think of that is that for every MYR1 worth of equity, the company was able to earn MYR0.12 in profit. Check out our latest analysis for Versatile Creative Berhad Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. To start with, Versatile Creative Berhad's ROE looks acceptable. On comparing with the average industry ROE of 7.7% the company's ROE looks pretty remarkable. Probably as a result of this, Versatile Creative Berhad was able to see an impressive net income growth of 72% over the last five years. However, there could also be other causes behind this growth. Such as - high earnings retention or an efficient management in place. As a next step, we compared Versatile Creative 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 7.8%. Earnings growth is a huge factor in stock valuation. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). Doing so will help them establish if the stock's future looks promising or ominous. Is Versatile Creative Berhad fairly valued compared to other companies? These 3 valuation measures might help you decide. Versatile Creative Berhad doesn't pay any regular dividends to its shareholders, meaning that the company has been reinvesting all of its profits into the business. This is likely what's driving the high earnings growth number discussed above. In total, we are pretty happy with Versatile Creative Berhad's performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial 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. Let's not forget, business risk is also one of the factors that affects the price of the stock. So this is also an important area that investors need to pay attention to before making a decision on any business. Our risks dashboard will have the 1 risk we have identified for Versatile Creative Berhad. 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
31-03-2025
- Business
- Yahoo
Daythree Digital Berhad (KLSE:DAY3) Might Be Having Difficulty Using Its Capital Effectively
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. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding 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. Although, when we looked at Daythree Digital Berhad (KLSE:DAY3), it didn't seem to tick all of these boxes. 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. Analysts use this formula to calculate it for Daythree Digital Berhad: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.01 = RM809k ÷ (RM90m - RM11m) (Based on the trailing twelve months to December 2024). Therefore, Daythree Digital Berhad has an ROCE of 1.0%. Ultimately, that's a low return and it under-performs the Commercial Services industry average of 6.0%. Check out our latest analysis for Daythree Digital 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 Daythree Digital Berhad. On the surface, the trend of ROCE at Daythree Digital Berhad doesn't inspire confidence. Over the last five years, returns on capital have decreased to 1.0% from 19% five years ago. 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 may take some time before the company starts to see any change in earnings from these investments. In summary, Daythree Digital Berhad is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. And investors appear hesitant that the trends will pick up because the stock has fallen 23% in the last year. In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere. Daythree Digital Berhad does have some risks though, and we've spotted 3 warning signs for Daythree Digital Berhad that you might be interested in. While Daythree Digital 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.
Yahoo
29-01-2025
- Business
- Yahoo
Some Investors May Be Worried About Pentamaster Corporation Berhad's (KLSE:PENTA) Returns On Capital
If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Having said that, from a first glance at Pentamaster Corporation Berhad (KLSE:PENTA) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper 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. To calculate this metric for Pentamaster Corporation Berhad, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.083 = RM90m ÷ (RM1.3b - RM217m) (Based on the trailing twelve months to September 2024). So, Pentamaster Corporation Berhad has an ROCE of 8.3%. Even though it's in line with the industry average of 8.3%, it's still a low return by itself. See our latest analysis for Pentamaster Corporation Berhad Above you can see how the current ROCE for Pentamaster Corporation Berhad compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Pentamaster Corporation Berhad for free. On the surface, the trend of ROCE at Pentamaster Corporation Berhad doesn't inspire confidence. Around five years ago the returns on capital were 23%, but since then they've fallen to 8.3%. However it looks like Pentamaster Corporation Berhad might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. 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, Pentamaster Corporation Berhad is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. And with the stock having returned a mere 7.6% in the last five years to shareholders, you could argue that they're aware of these lackluster trends. Therefore, if you're looking for a multi-bagger, we'd propose looking at other options. While Pentamaster Corporation Berhad doesn't shine too bright in this respect, it's still worth seeing if the company is trading at attractive prices. You can find that out with our on our platform. While Pentamaster Corporation 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
