Returns At Global Mixed-Mode Technology (TWSE:8081) Are On The Way Up

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Global Mixed-Mode Technology's (TWSE:8081) returns on capital, so let's have a look.

Understanding Return On Capital Employed (ROCE)

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Global Mixed-Mode Technology:

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

0.18 = NT$1.6b ÷ (NT$10b - NT$1.8b) (Based on the trailing twelve months to December 2023).

Therefore, Global Mixed-Mode Technology has an ROCE of 18%. On its own, that's a standard return, however it's much better than the 8.2% generated by the Semiconductor industry.

See our latest analysis for Global Mixed-Mode Technology

In the above chart we have measured Global Mixed-Mode Technology'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 Global Mixed-Mode Technology for free.

So How Is Global Mixed-Mode Technology's ROCE Trending?

We like the trends that we're seeing from Global Mixed-Mode Technology. Over the last five years, returns on capital employed have risen substantially to 18%. Basically the business is earning more per dollar of capital invested and in addition to that, 115% more capital is being employed now too. So we're very much inspired by what we're seeing at Global Mixed-Mode Technology thanks to its ability to profitably reinvest capital.

In Conclusion...

All in all, it's terrific to see that Global Mixed-Mode Technology is reaping the rewards from prior investments and is growing its capital base. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue.

Global Mixed-Mode Technology does have some risks though, and we've spotted 1 warning sign for Global Mixed-Mode Technology that you might be interested in.

While Global Mixed-Mode Technology may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.