![]() This article by Simply Wall St is general in nature. Alternatively, email editorial-team (at). Have feedback on this article? Concerned about the content? Get in touch with us directly. Valuation is complex, but we're helping make it simple.įind out whether Great Lakes Dredge & Dock 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. While Great Lakes Dredge & Dock isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets. One more thing to note, we've identified 2 warning signs with Great Lakes Dredge & Dock and understanding these should be part of your investment process. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up. Since the stock has only returned 39% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. The Bottom LineĪll in all, it's terrific to see that Great Lakes Dredge & Dock is reaping the rewards from prior investments and is growing its capital base. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 22%. The data shows that returns on capital have increased substantially over the last five years to 8.7%. While in absolute terms it isn't a high ROCE, it's promising to see that it has been moving in the right direction. What Does the ROCE Trend For Great Lakes Dredge & Dock Tell Us? If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company. In the above chart we have measured Great Lakes Dredge & Dock's prior ROCE against its prior performance, but the future is arguably more important. NasdaqGS:GLDD Return on Capital Employed October 12th 2022 In absolute terms, that's a low return but it's around the Construction industry average of 8.0%.Ĭheck out the opportunities and risks within the US Construction industry. Thus, Great Lakes Dredge & Dock has an ROCE of 8.7%. Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)Ġ.087 = US$76m ÷ (US$1.0b - US$142m) (Based on the trailing twelve months to June 2022). To calculate this metric for Great Lakes Dredge & Dock, this is the formula: If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Understanding Return On Capital Employed (ROCE) With that in mind, we've noticed some promising trends at Great Lakes Dredge & Dock ( NASDAQ:GLDD) so let's look a bit deeper. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. ![]() To find a multi-bagger stock, what are the underlying trends we should look for in a business? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing.
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