Here's What's Concerning About Singapore Telecommunications' (SGX:Z74) Returns On Capital
Here's What's Concerning About Singapore Telecommunications' (SGX:Z74) Returns On Capital
When we're researching a company, it's sometimes hard to find the warning signs, but there are some financial metrics that can help spot trouble early. Typically, we'll see the trend of both return on capital employed (ROCE) declining and this usually coincides with a decreasing amount of capital employed. Ultimately this means that the company is earning less per dollar invested and on top of that, it's shrinking its base of capital employed. Having said that, after a brief look, Singapore Telecommunications (SGX:Z74) we aren't filled with optimism, but let's investigate further.
What Is Return On Capital Employed (ROCE)?
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on Singapore Telecommunications is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.027 = S$1.1b ÷ (S$47b - S$8.0b) (Based on the trailing twelve months to September 2022).
Thus, Singapore Telecommunications has an ROCE of 2.7%. Ultimately, that's a low return and it under-performs the Telecom industry average of 11%.
View our latest analysis for Singapore Telecommunications
SGX:Z74 Return on Capital Employed December 12th 2022Above you can see how the current ROCE for Singapore Telecommunications 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 Singapore Telecommunications here for free.
What Can We Tell From Singapore Telecommunications' ROCE Trend?
In terms of Singapore Telecommunications' historical ROCE movements, the trend doesn't inspire confidence. About five years ago, returns on capital were 6.7%, however they're now substantially lower than that as we saw above. Meanwhile, capital employed in the business has stayed roughly the flat over the period. This combination can be indicative of a mature business that still has areas to deploy capital, but the returns received aren't as high due potentially to new competition or smaller margins. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on Singapore Telecommunications becoming one if things continue as they have.
The Bottom Line
All in all, the lower returns from the same amount of capital employed aren't exactly signs of a compounding machine. And, the stock has remained flat over the last five years, so investors don't seem too impressed either. Unless there is a shift to a more positive trajectory in these metrics, we would look elsewhere.
One more thing to note, we've identified 1 warning sign with Singapore Telecommunications and understanding it should be part of your investment process.
For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This 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.
當我們在研究一家公司時,有時很難找到警告標誌,但是有一些財務指標可以幫助及早發現麻煩。通常情況下,我們會看到兩者的趨勢 返回 就用資本(ROCE)下降,這通常恰逢下降 量 所使用的資本。最終,這意味著該公司每投資美元的收入減少,最重要的是,它正在縮小其使用的資本基礎。話雖如此,經過簡短的看看, 新加坡電信 (SGX:Z74)我們沒有充滿樂觀情緒,但讓我們進一步調查。
什麼是資本回報率(ROCE)?
對於那些不確定 ROCE 是什麼的人來說,它衡量公司可以從其業務中使用的資本產生的稅前利潤的數額。新加坡電信的計算公式為:
所用資本報酬率 = 除利息及稅前盈利 ÷ (總資產-流動負債)
0.027 = 新加坡元 ÷ (47 億新加坡元-8 億新加坡元) (以截至 2022 年 9 月為止的最近十二個月計算)。
因此, 新加坡電信的投資回報率為 2.7%。 最終,這是一個低回報,它的表現低於 11% 的電信行業平均水平。
查看我們對新加坡電信的最新分析
新加坡:Z74 2022 年十二月十二日所僱資本申報表在上面,您可以看到新加坡電信的當前 ROCE 與之前的資本回報率相比如何,但是過去只能看到很多東西。如果您願意,您可以在此處查看涵蓋新加坡電信的分析師的預測 免費。
我們可以從新加坡電信的 ROCE 趨勢中看出什麼?
就新加坡電信的歷史 ROCE 走勢而言,這種趨勢並不能激發信心。大約五年前,資本回報率為 6.7%,但現在大幅低於我們上面所看到的。與此同時,在該業務中使用的資本在此期間大致保持平坦。這種組合可能表明一個成熟的企業仍然有部署資本的領域, 但收到的回報不是那麼高,可能由於新的競爭或較小的利潤率.因此,由於這些趨勢通常不利於創建一個多袋子, 我們不會屏住呼吸新加坡電信成為一體,如果事情繼續,因為他們有.
底線
總而言之,採用相同數量的資本的較低回報並不完全是複合機器的跡象。而且,在過去五年中,該股票一直保持平坦,因此投資者似乎也不會給人留下深刻的印象。除非在這些指標中轉向更積極的軌跡,否則我們將尋找其他地方。
還有一件事要注意,我們已經確定 1 警告標誌 與新加坡電信一起了解它應該是您投資過程的一部分。
對於那些誰喜歡投資 固體公司, 看看這個 自由 具有穩健的資產負債表和高股權回報的公司名單。
對這篇文章有反饋嗎?關注內容? 取得聯繫 直接與我們聯繫。 或者,通過電子郵件發送電子郵件給編輯團隊。
這篇文章由簡單牆聖是一般性質. 我們僅使用公正的方法,根據歷史數據和分析師預測提供評論,我們的文章並不打算作為財務建議。 它並不構成購買或出售任何股票的建議,也不會考慮您的目標或您的財務狀況。我們的目標是為您帶來由基本數據驅動的長期集中分析。請注意,我們的分析可能不會考慮最新的價格敏感公司公告或定性材料。簡易華街在提及的任何股票中都沒有倉位。
譯文內容由第三人軟體翻譯。
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