Stock Analysis

Daseke (NASDAQ:DSKE) Is Looking To Continue Growing Its Returns On Capital

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NasdaqCM:DSKE
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If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Daseke (NASDAQ:DSKE) looks quite promising in regards to its trends of return on capital.

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 Daseke, this is the formula:

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

0.11 = US$96m ÷ (US$1.1b - US$212m) (Based on the trailing twelve months to December 2021).

So, Daseke has an ROCE of 11%. That's a relatively normal return on capital, and it's around the 12% generated by the Transportation industry.

Check out our latest analysis for Daseke

roce
NasdaqCM:DSKE Return on Capital Employed March 1st 2022

Above you can see how the current ROCE for Daseke compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.

The Trend Of ROCE

Daseke is displaying some positive trends. The data shows that returns on capital have increased substantially over the last five years to 11%. The amount of capital employed has increased too, by 83%. So we're very much inspired by what we're seeing at Daseke thanks to its ability to profitably reinvest capital.

In Conclusion...

To sum it up, Daseke has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Investors may not be impressed by the favorable underlying trends yet because over the last five years the stock has only returned 26% to shareholders. So with that in mind, we think the stock deserves further research.

Daseke does have some risks, we noticed 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

While Daseke 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.

Valuation is complex, but we're helping make it simple.

Find out whether Daseke is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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