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 2022
Above 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.
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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.
当我们研究一家公司时,有时很难找到警告信号,但是有一些财务指标可以帮助及早发现问题。通常,我们会看到两者的趋势 返回 在资本使用率(ROCE)下降时,这通常与下降同时发生 金额 所用资本的百分比。归根结底,这意味着该公司每投资一美元的收入减少了,最重要的是,它正在缩小其使用的资本基础。话虽如此,稍微看了一下, 新加坡电信 (SGX: Z74) 我们并不乐观,但让我们进一步调查。
什么是资本使用回报率(ROCE)?
对于那些不确定投资回报率是多少,它衡量的是公司可以从其业务中使用的资本中获得的税前利润。新加坡电信的计算公式为:
使用资本回报率 = 利息和税前收益 (EBIT) ÷(总资产-流动负债)
0.027 = 11亿新元 ≥(470亿新元-8.0亿新元) (基于截至2022年9月的过去十二个月)。
因此, 新加坡电信的投资回报率为2.7%。 归根结底,这是一个低回报,其表现低于电信行业11%的平均水平。
查看我们对新加坡电信的最新分析
新加坡证券交易所:Z74 2022 年 12 月 12 日已动用资本回报率
在上方你可以看到新加坡电信当前的投资回报率与之前的资本回报率相比如何,但从过去可以看出来的只有那么多。如果你愿意,可以在这里查看报道新加坡电信的分析师的预测 免费。
我们可以从新加坡电信的ROCE趋势中看出什么?
就新加坡电信的历史ROCE走势而言,这种趋势并不能激发信心。大约五年前,资本回报率为6.7%,但现在远低于我们在上面看到的水平。同时,在此期间,该业务中使用的资本基本保持不变。这种合并可能表明成熟的企业仍有资金部署领域,但由于新的竞争或利润率降低,获得的回报并没有那么高。因此,由于这些趋势通常不利于创建多包机,因此如果情况继续下去,我们就不会屏住呼吸,让新加坡电信成为一体。
底线
总而言之,使用相同数量的资本所产生的较低回报并不完全是复利机的标志。而且,该股在过去五年中一直持平,因此投资者似乎也没有留下太深的印象。除非这些指标转向更积极的轨迹,否则我们会将目光投向其他地方。
还有一件事要注意,我们已经确定了 1 个警告标志 与新加坡电信合作,并了解这应该是您投资过程的一部分。
对于那些喜欢投资的人 实力雄厚的公司, 看看这个 免费的 资产负债表稳健、股本回报率高的公司名单。
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Simply Wall St 的这篇文章本质上是笼统的。 我们仅使用公正的方法根据历史数据和分析师的预测提供评论,我们的文章无意作为财务建议。 它不构成买入或卖出任何股票的建议,也没有考虑您的目标或财务状况。我们的目标是为您提供由基本面数据驱动的长期重点分析。请注意,我们的分析可能不考虑最新的价格敏感公司公告或定性材料。简而言之,华尔街在上述任何股票中都没有头寸。