Returns Are Gaining Momentum At Inner Mongolia Xingye Silver &Tin MiningLtd (SZSE:000426)

There are a few key trends to look for if we want to identify the next multi-bagger. 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, Inner Mongolia Xingye Silver &Tin MiningLtd (SZSE:000426) looks quite promising in regards to its trends of return on capital.

What Is Return On Capital Employed (ROCE)?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Inner Mongolia Xingye Silver &Tin MiningLtd is:

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

0.19 = CN¥1.6b ÷ (CN¥11b - CN¥3.0b) (Based on the trailing twelve months to March 2024).

Therefore, Inner Mongolia Xingye Silver &Tin MiningLtd has an ROCE of 19%. In absolute terms, that's a satisfactory return, but compared to the Metals and Mining industry average of 6.7% it's much better.

Check out our latest analysis for Inner Mongolia Xingye Silver &Tin MiningLtd

In the above chart we have measured Inner Mongolia Xingye Silver &Tin MiningLtd's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Inner Mongolia Xingye Silver &Tin MiningLtd for free.

How Are Returns Trending?

We like the trends that we're seeing from Inner Mongolia Xingye Silver &Tin MiningLtd. Over the last five years, returns on capital employed have risen substantially to 19%. The amount of capital employed has increased too, by 21%. So we're very much inspired by what we're seeing at Inner Mongolia Xingye Silver &Tin MiningLtd thanks to its ability to profitably reinvest capital.

What We Can Learn From Inner Mongolia Xingye Silver &Tin MiningLtd's ROCE

All in all, it's terrific to see that Inner Mongolia Xingye Silver &Tin MiningLtd is reaping the rewards from prior investments and is growing its capital base. Since the stock has returned a staggering 169% to shareholders over the last five years, it looks like investors are recognizing these changes. 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.

While Inner Mongolia Xingye Silver &Tin MiningLtd looks impressive, no company is worth an infinite price. The intrinsic value infographic for 000426 helps visualize whether it is currently trading for a fair price.

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.

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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.

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