If you want to spot potential multi-baggers, there are often underlying trends that can provide clues. We hope to increase our revenue as well. Essentially, this means that companies have profitable initiatives that they can continue to reinvest. This is a feature of the compound interest calculator. With that in mind, ROCE XPEL (NASDAQ:XPEL) looks good, so let’s see what the trend tells us.
What is Return on Capital Employed (ROCE)?
For those who don’t know what ROCE is, it measures the amount of pre-tax profit a company can generate from the capital it uses in its operations. To calculate this metric in XPEL, use the following formula:
Return on Capital Employed = Earnings Before Interest and Taxes (EBIT) ÷ (Total Assets – Current Liabilities)
0.33 = US$52 million ÷ (US$188 million – US$32 million) (Based on the last 12 months to September 2022).
therefore, XPEL has a ROCE of 33%. This is an impressive return, and not only that, it beats the 13% average for its peers.
See the latest analysis of XPEL
In the chart above, we can see that XPEL’s current ROCE is compared to its previous return on capital, but we don’t know much from the past. If you’d like, you can check out the analyst’s predictions covering XPEL here. freedom.
What does XPEL’s ROCE trend tell us?
Investors will be happy with what’s happening with XPEL. This data shows that the return on capital has increased significantly over the last five years he to 33%. Essentially, the business is making more money per his dollar of capital invested, plus 902% more capital is being taken. Increased revenue with increased capital is common among multibaggers and that’s why we were impressed.
Another thing to note is that XPEL has reduced current liabilities to 17% of total assets during this period. This effectively reduced the amount of funding from suppliers and short-term creditors. So you can be confident that ROCE’s growth is the result of fundamental improvements in the business, not cooking classes with the company’s books.
What we can learn from ROCE in XPEL
In summary, XPEL has proven that it can reinvest in a business and generate a higher return on the capital spent. This is great. Investors seem to be aware of these changes, as the stock has returned a staggering 4,502% to shareholders over the past five years. So I think it’s worth taking some time to see if these trends continue.
XPEL presents some risks. two warning signs (And there is one thing that bothers me a little bit) I think you should know.
XPEL isn’t the only one with high returns.Check us out if you want to see more freedom List of companies with solid fundamentals and strong return on equity.
Valuation is complicated, but we’re here to help make it simple.
find out if XPEL You may be overestimated or underestimated by checking out our comprehensive analysis including: Fair value estimates, risks and warnings, dividends, insider trading and financial health.
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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …
