Returns Are Gaining Momentum At NAURA Technology Group (SZSE:002371)

If you're looking for a multi-bagger, there's a few things to 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 on that note, NAURA Technology Group (SZSE:002371) looks quite promising in regards to its trends of return on capital.

Understanding 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. Analysts use this formula to calculate it for NAURA Technology Group:

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

0.13 = CN¥4.7b ÷ (CN¥56b - CN¥20b) (Based on the trailing twelve months to March 2024).

Thus, NAURA Technology Group has an ROCE of 13%. In absolute terms, that's a satisfactory return, but compared to the Semiconductor industry average of 4.2% it's much better.

See our latest analysis for NAURA Technology Group

Above you can see how the current ROCE for NAURA Technology Group 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 NAURA Technology Group .

What Does the ROCE Trend For NAURA Technology Group Tell Us?

Investors would be pleased with what's happening at NAURA Technology Group. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 13%. The amount of capital employed has increased too, by 518%. So we're very much inspired by what we're seeing at NAURA Technology Group thanks to its ability to profitably reinvest capital.

The Key Takeaway

All in all, it's terrific to see that NAURA Technology Group is reaping the rewards from prior investments and is growing its capital base. Since the stock has returned a staggering 428% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue.

While NAURA Technology Group looks impressive, no company is worth an infinite price. The intrinsic value infographic for 002371 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.