We Like Shenzhen Mindray Bio-Medical Electronics' (SZSE:300760) Returns And Here's How They're Trending

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at the ROCE trend of Shenzhen Mindray Bio-Medical Electronics (SZSE:300760) we really liked what we saw.

Return On Capital Employed (ROCE): What Is It?

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. Analysts use this formula to calculate it for Shenzhen Mindray Bio-Medical Electronics:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.29 = CN¥13b ÷ (CN¥58b - CN¥12b) (Based on the trailing twelve months to September 2024).

So, Shenzhen Mindray Bio-Medical Electronics has an ROCE of 29%. That's a fantastic return and not only that, it outpaces the average of 5.9% earned by companies in a similar industry.

View our latest analysis for Shenzhen Mindray Bio-Medical Electronics

In the above chart we have measured Shenzhen Mindray Bio-Medical Electronics' prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Shenzhen Mindray Bio-Medical Electronics .

The Trend Of ROCE

The trends we've noticed at Shenzhen Mindray Bio-Medical Electronics are quite reassuring. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 29%. The amount of capital employed has increased too, by 136%. So we're very much inspired by what we're seeing at Shenzhen Mindray Bio-Medical Electronics thanks to its ability to profitably reinvest capital.

In Conclusion...

To sum it up, Shenzhen Mindray Bio-Medical Electronics has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 60% return over the last five years. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

Shenzhen Mindray Bio-Medical Electronics does have some risks though, and we've spotted 1 warning sign for Shenzhen Mindray Bio-Medical Electronics that you might be interested in.

High returns are a key ingredient to strong performance, so check out our free list ofstocks earning high returns on equity with solid balance sheets.

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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.