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If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity. One more thing: We've identified 3 warning signs with Fuzhou Rockchip ElectronicsLtd (at least 1 which is potentially serious), and understanding these would certainly be useful. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term. Considering the stock has delivered 4.3% to its stockholders over the last year, it may be fair to think that investors aren't fully aware of the promising trends yet. In Conclusion.Ī company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Fuzhou Rockchip ElectronicsLtd has. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed. The amount of capital employed has increased too, by 266%. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 14%. The Trend Of ROCEįuzhou Rockchip ElectronicsLtd is displaying some positive trends. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company. In the above chart we have measured Fuzhou Rockchip ElectronicsLtd's prior ROCE against its prior performance, but the future is arguably more important. See our latest analysis for Fuzhou Rockchip ElectronicsLtd SHSE:603893 Return on Capital Employed April 17th 2022 On its own, that's a standard return, however it's much better than the 10% generated by the Semiconductor industry. So, Fuzhou Rockchip ElectronicsLtd has an ROCE of 14%. Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities )Ġ.14 = CN¥410m ÷ (CN¥3.4b - CN¥485m) (Based on the trailing twelve months to December 2021). Analysts use this formula to calculate it for Fuzhou Rockchip ElectronicsLtd: Understanding Return On Capital Employed (ROCE)įor 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.
So on that note, Fuzhou Rockchip ElectronicsLtd (SHSE:603893) looks quite promising in regards to its trends of return on capital. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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.