廣告
香港股市 將收市,收市時間:1 小時 27 分鐘
  • 恒指

    16,250.75
    -349.71 (-2.11%)
     
  • 國指

    5,743.60
    -112.84 (-1.93%)
     
  • 上證綜指

    3,017.27
    -40.11 (-1.31%)
     
  • 滬深300

    3,519.60
    -29.47 (-0.83%)
     
  • 美元

    7.8272
    -0.0013 (-0.02%)
     
  • 人民幣

    0.9243
    +0.0003 (+0.03%)
     
  • 道指

    37,735.11
    -248.13 (-0.65%)
     
  • 標普 500

    5,061.82
    -61.59 (-1.20%)
     
  • 納指

    15,885.02
    -290.08 (-1.79%)
     
  • 日圓

    0.0504
    -0.0001 (-0.24%)
     
  • 歐元

    8.3018
    -0.0139 (-0.17%)
     
  • 英鎊

    9.7200
    -0.0200 (-0.21%)
     
  • 紐約期油

    85.71
    +0.30 (+0.35%)
     
  • 金價

    2,395.00
    +12.00 (+0.50%)
     
  • Bitcoin

    63,013.68
    -3,276.74 (-4.94%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     

Returns Are Gaining Momentum At Signet Jewelers (NYSE:SIG)

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. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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. So when we looked at Signet Jewelers (NYSE:SIG) and its trend of ROCE, we really liked what we saw.

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 Signet Jewelers is:

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

0.15 = US$623m ÷ (US$6.1b - US$1.9b) (Based on the trailing twelve months to October 2023).

廣告

Thus, Signet Jewelers has an ROCE of 15%. That's a relatively normal return on capital, and it's around the 13% generated by the Specialty Retail industry.

Check out our latest analysis for Signet Jewelers

roce
roce

Above you can see how the current ROCE for Signet Jewelers 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 analyst report for Signet Jewelers .

What The Trend Of ROCE Can Tell Us

Signet Jewelers has not disappointed with their ROCE growth. The figures show that over the last five years, ROCE has grown 38% 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. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.

The Key Takeaway

To sum it up, Signet Jewelers is collecting higher returns from the same amount of capital, and that's impressive. Since the stock has returned a staggering 357% 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.

Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for SIG that compares the share price and estimated value.

While Signet Jewelers 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.