Yahoo Finance DISH Network (NASDAQ:DISH) Has Some Way To Go To Become A Multi-Bagger
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. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) 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. With that in mind, the ROCE of DISH Network (NASDAQ:DISH) looks decent, right now, so lets see what the trend of returns can tell us.
Understanding Return On Capital Employed (ROCE)
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for DISH Network:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.10 = US$3.6b ÷ (US$40b - US$4.0b) (Based on the trailing twelve months to June 2021).
Therefore, DISH Network has an ROCE of 10%. That's a pretty standard return and it's in line with the industry average of 9.8%.
Check out our latest analysis for DISH Network
In the above chart we have measured DISH Network's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free report for DISH Network.
What Can We Tell From DISH Network's ROCE Trend?
The trend of ROCE doesn't stand out much, but returns on a whole are decent. The company has consistently earned 10% for the last five years, and the capital employed within the business has risen 72% in that time. 10% is a pretty standard return, and it provides some comfort knowing that DISH Network has consistently earned this amount. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.
What We Can Learn From DISH Network's ROCE
The main thing to remember is that DISH Network has proven its ability to continually reinvest at respectable rates of return. Yet over the last five years the stock has declined 22%, so the decline might provide an opening. For that reason, savvy investors might want to look further into this company in case it's a prime investment.
If you want to know some of the risks facing DISH Network we've found 2 warning signs (1 is potentially serious!) that you should be aware of before investing here.
While DISH Network isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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.
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