Identifying Stocks with Potential for Long-Term Value Multiplication

When looking for stocks that have the potential to multiply in value over the long term, investors should pay attention to growing returns on capital employed (ROCE) and an expanding base of capital employed. These factors indicate that a business is reinvesting profits at increasing rates of return. One company that demonstrates these positive trends is ZIM Integrated Shipping Services.

Return on Capital Employed (ROCE) measures the amount of pre-tax profits a company can generate from the capital employed in its business. ZIM Integrated Shipping Services has an impressive ROCE of 23%, which is higher than the industry average of 11%. This indicates that the company is generating significant returns on its capital.

Over the past five years, ZIM Integrated Shipping Services has experienced significant growth in its returns on capital employed. The company has been able to earn more per dollar of capital invested, and it has also increased its capital employed by 723%. These positive trends indicate that ZIM Integrated Shipping Services is effectively reinvesting capital and driving profitability.

Additionally, the company’s ratio of current liabilities to total assets has decreased to 22%, indicating improved fundamental performance rather than financial manipulation. This reduction in reliance on short-term creditors or suppliers further strengthens the positive outlook for ZIM Integrated Shipping Services.

Despite the recent decline in the company’s stock price, which presents a potential opportunity for investors, further research into the company’s valuation metrics and future prospects is recommended. It is important to consider factors such as fair value estimates, risks, dividends, insider transactions, and financial health to assess the true value of the stock.

While this article provides general analysis based on historical data and analyst forecasts, it does not constitute financial advice. Investors should consider their own objectives and financial situation before making any investment decisions. The analysis may not include the latest market announcements or qualitative information.

Sources: Simply Wall St