Investors Should Be Encouraged By PDD Holdings' (NASDAQ:PDD) Returns On Capital
There are a few key trends to look for if we want to identify the next multi-bagger. Ideally, a business will show two trends; firstly a growing return on capital employed and secondly, an increasing amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at the ROCE trend of PDD Holdings we really liked what we saw.Return On Capital Employed : What Is It?If you haven't worked with ROCE before, it measures the 'return' a company generates from capital employed in its business. The formula for this calculation on PDD Holdings is:. Return on Capital Employed = Earnings Before Interest and Tax ÷ . Thus, PDD Holdings has an ROCE of 30%. In absolute terms that's a great return and it's even better than the Multiline Retail industry average of 11%.Above you can see how the current ROCE for PDD Holdings compares to its prior returns on capital, but there's only so muc
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