Will the Promising Trends At Sentien Printing Factory (GTSM:8410) Continue?

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, 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 when we looked at Sentien Printing Factory (GTSM:8410) and its trend of ROCE, we really liked what we saw.

Return On Capital Employed (ROCE): What is it?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Sentien Printing Factory, this is the formula:

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

0.14 = NT$235m ÷ (NT$2.0b - NT$325m) (Based on the trailing twelve months to September 2020).

Therefore, Sentien Printing Factory has an ROCE of 14%. On its own, that's a standard return, however it's much better than the 6.7% generated by the Chemicals industry.

See our latest analysis for Sentien Printing Factory

Historical performance is a great place to start when researching a stock so above you can see the gauge for Sentien Printing Factory's ROCE against it's prior returns. If you want to delve into the historical earnings, revenue and cash flow of Sentien Printing Factory, check out these free graphs here.

What Can We Tell From Sentien Printing Factory's ROCE Trend?

We're delighted to see that Sentien Printing Factory is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 14% on its capital. And unsurprisingly, like most companies trying to break into the black, Sentien Printing Factory is utilizing 27% more capital than it was five years ago. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

Our Take On Sentien Printing Factory's ROCE

To the delight of most shareholders, Sentien Printing Factory has now broken into profitability. And a remarkable 210% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Sentien Printing Factory can keep these trends up, it could have a bright future ahead.

If you want to continue researching Sentien Printing Factory, you might be interested to know about the 2 warning signs that our analysis has discovered.

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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