We Like These Underlying Return On Capital Trends At Evergreen Marine Corporation (Taiwan) (TWSE:2603)

What trends should we look for it we want to identify stocks that can multiply in value over the long term? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Evergreen Marine Corporation (Taiwan) (TWSE:2603) so let's look a bit deeper.

Return On Capital Employed (ROCE): What Is It?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on Evergreen Marine Corporation (Taiwan) is:

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

0.087 = NT$59b ÷ (NT$827b - NT$147b) (Based on the trailing twelve months to June 2024).

So, Evergreen Marine Corporation (Taiwan) has an ROCE of 8.7%. In absolute terms, that's a low return, but it's much better than the Shipping industry average of 5.1%.

Check out our latest analysis for Evergreen Marine Corporation (Taiwan)

In the above chart we have measured Evergreen Marine Corporation (Taiwan)'s prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Evergreen Marine Corporation (Taiwan) .

So How Is Evergreen Marine Corporation (Taiwan)'s ROCE Trending?

We're glad to see that ROCE is heading in the right direction, even if it is still low at the moment. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 8.7%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 187%. So we're very much inspired by what we're seeing at Evergreen Marine Corporation (Taiwan) thanks to its ability to profitably reinvest capital.

Our Take On Evergreen Marine Corporation (Taiwan)'s ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Evergreen Marine Corporation (Taiwan) has. Since the stock has returned a staggering 1,354% 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.

If you'd like to know more about Evergreen Marine Corporation (Taiwan), we've spotted 4 warning signs, and 1 of them doesn't sit too well with us.

While Evergreen Marine Corporation (Taiwan) 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.