Stock Analysis

Returns At Huron Consulting Group (NASDAQ:HURN) Are On The Way Up

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There are a few key trends to look for if we want to identify the next multi-bagger. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount 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 Huron Consulting Group (NASDAQ:HURN) and its trend of ROCE, we really liked what we saw.

Understanding Return On Capital Employed (ROCE)

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. To calculate this metric for Huron Consulting Group, this is the formula:

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

0.12 = US$110m ÷ (US$1.2b - US$246m) (Based on the trailing twelve months to December 2022).

Therefore, Huron Consulting Group has an ROCE of 12%. That's a pretty standard return and it's in line with the industry average of 12%.

Check out our latest analysis for Huron Consulting Group

NasdaqGS:HURN Return on Capital Employed March 25th 2023

Above you can see how the current ROCE for Huron Consulting Group compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Huron Consulting Group here for free.

What Can We Tell From Huron Consulting Group's ROCE Trend?

Huron Consulting Group's ROCE growth is quite impressive. The figures show that over the last five years, ROCE has grown 89% whilst employing roughly the same amount of capital. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

In Conclusion...

In summary, we're delighted to see that Huron Consulting Group has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And a remarkable 106% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

One more thing, we've spotted 2 warning signs facing Huron Consulting Group that you might find interesting.

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.

What are the risks and opportunities for Huron Consulting Group?

Huron Consulting Group Inc., a professional services firm, provides consultancy services in the United States and internationally.

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  • Earnings are forecast to grow 20.32% per year


  • Debt is not well covered by operating cash flow

  • Significant insider selling over the past 3 months

  • Profit margins (5.2%) are lower than last year (8.8%)

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