2 days Ago By Simply Wall St.
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'll want to see a proven on capital employed (ROCE) that is increasing, and secondly, an expanding 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.
So when we looked at ( ) and its trend of ROCE, we really liked what we saw. 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 Abundante: 0.
032 = S$595k ÷ (S$19m - S$1.0m) . So, Ultimately, that's a low return and it under-performs the Basic Materials industry average of 7.
7%. Historical performance is a great place to start when researching a stock so above you can see the gauge for Abundante's ROCE against it's prior returns. If you're interested in investigating Abundante's past further, check out this .
Abundante has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 3.2% which is a sight for sore eyes.
Not only that, but the company is utilizing 32% more capital than before, but that's to be expected from a company trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns. In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 5.
3%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. This tells us that Abundante has grown its returns without a reliance on increasing their current liabilities, which we're very happy with. To the delight of most shareholders, Abundante has now broken into profitability.
Considering the stock has delivered 16% to its stockholders over the last five years, it may be fair to think that investors aren't fully aware of the promising trends yet. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term. One more thing, we've spotted that you might find interesting.
For those who like to invest in check out this.
