Returns At Hunan TV & Broadcast Intermediary (SZSE:000917) Are On The Way Up

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Hunan TV & Broadcast Intermediary (SZSE:000917) looks quite promising in regards to its trends of return on capital.

What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Hunan TV & Broadcast Intermediary:

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

0.0012 = CN¥16m ÷ (CN¥17b - CN¥3.9b) (Based on the trailing twelve months to June 2024).

Therefore, Hunan TV & Broadcast Intermediary has an ROCE of 0.1%. Ultimately, that's a low return and it under-performs the Media industry average of 4.1%.

View our latest analysis for Hunan TV & Broadcast Intermediary

Above you can see how the current ROCE for Hunan TV & Broadcast Intermediary compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Hunan TV & Broadcast Intermediary .

What Can We Tell From Hunan TV & Broadcast Intermediary's ROCE Trend?

Hunan TV & Broadcast Intermediary has broken into the black (profitability) and we're sure it's a sight for sore eyes. The company now earns 0.1% on its capital, because five years ago it was incurring losses. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. With no noticeable increase in capital employed, it's worth knowing what the company plans on doing going forward in regards to reinvesting and growing the business. Because in the end, a business can only get so efficient.

The Bottom Line

To sum it up, Hunan TV & Broadcast Intermediary is collecting higher returns from the same amount of capital, and that's impressive. Since the total return from the stock has been almost flat over the last five years, there might be an opportunity here if the valuation looks good. With that in mind, we believe the promising trends warrant this stock for further investigation.

While Hunan TV & Broadcast Intermediary looks impressive, no company is worth an infinite price. The intrinsic value infographic for 000917 helps visualize whether it is currently trading for a fair price.

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.