Did you know there are financial indicators that can give clues about potential multi-baggers? In particular, there are two things to look out for. First, return Return on Invested Capital (ROCE) and secondly, the company’s amount An ROCE on invested capital means that a company has profitable endeavors that it can continually reinvest in — the hallmark of a compound interest machine. Global International Mining Group (HKG:3939) We loved what we saw.
What is Return on Invested Capital (ROCE)?
For those unfamiliar, ROCE is a metric that assesses how much pre-tax profit (as a percentage) a company earned on the capital invested in its business: Here’s the formula for this calculation for Wanguo International Mining Group:
Return on Invested Capital = Earnings Before Interest and Taxes (EBIT) ÷ (Total Assets – Current Liabilities)
0.23 = 438 million yuan / (2.4 billion yuan – 494 million yuan) (Based on the trailing 12 months ending December 2023).
therefore, Universal International Mining Group’s ROCE is 23%. Not only is this an excellent return, but it’s also higher than the average return of 11% earned by companies in a similar industry.
View our latest analysis for Wanguo International Mining Group
Historical performance is a great starting point when researching a stock. Above you can see a graph comparing Wanguo International Mining Group’s ROCE with its past earnings. If you want to delve deeper into the past earnings, follow the link below. free A detailed chart showing Wanguo International Mining Group’s earnings and cash flow performance.
So how is Wanguo International Mining Group’s ROCE trending?
We like what’s happening with Universal International Mining Group. Over the past five years, the company has seen a strong increase in return on invested capital of 23%. The amount of invested capital has also increased by 99%. This suggests that there is ample opportunity to invest capital internally, and at higher rates. This is a common combination for multi-baggers.
Conclusion
Companies that can grow and continually reinvest returns on capital are highly sought-after traits, and Universal International Mining Group has exactly that. This stock has also performed very well over the past five years, and investors are taking these patterns into consideration. Therefore, given that this stock has proven to be on promising trends, it is worth investigating the company further to see if these trends are likely to continue.
However, there are some risks in the Wanhua International Mining Group, and we One Warning Sign for Wanguo International Mining Group Something you might be interested in.
If you want to see other companies making high profits, free Here is a list of companies with solid balance sheets and strong earnings.
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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, 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 your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
