Newgen Software Technologies (NSE:NEWGEN) could become a multi-function printer

If you want to identify the next multi-bagger, there are a few key trends to look out for. One common approach is to Return value Return on invested capital (ROCE) is increasing, amount More than 100% of invested capital. When you see this, it usually means the company has a good business model and lots of profitable reinvestment opportunities. NewGen Software Technologies (NSE:NEWGEN) ROCE trends, we are very pleased with what we are seeing.

What is Return on Invested Capital (ROCE)?

For those unfamiliar, ROCE is a metric that assesses how much pre-tax profit (as a percentage) a company earns on the capital invested in its business: The formula for calculating this metric for Newgen Software Technologies is:

Return on Invested Capital = Earnings Before Interest and Taxes (EBIT) ÷ (Total Assets – Current Liabilities)

0.20 = ₹2.6 billion ÷ (₹1.7 billion – ₹3.8 billion) (Based on the trailing 12 months ending March 2024).

So, Newgen Software Technologies has an ROCE of 20%. Not only is this an excellent return, but it’s also higher than the average return of 11% earned by companies in a similar industry.

Check out our latest analysis for Newgen Software Technologies

In the chart above you can see how Neugen Software Technologies’ current ROCE compares to its historical return on capital, but the history can only tell you so much. If you’re interested, you can check out analyst forecasts on our free Analyst Report for Newgen Software Technologies.

ROCE Trends

Neugen Software Technologies’ ROCE history is very impressive. Over the past five years, ROCE has remained relatively flat at around 20%, while capital deployed in the business has grown by 148%. That kind of return would be the envy of most companies, and it’s even more impressive when you consider that the company has repeatedly reinvested at this rate. If this trend continues, it wouldn’t be a surprise to see the company become a multi-fold profitable business.

Key Takeaways

In summary, we’re pleased to see that Neugen Software Technologies has been compounding profits by reinvesting at consistently high rates of return, a common characteristic of multi-baggers. On top of that, the stock has given shareholders who held onto it over the past five years an astounding 580% return. Investors seem to be aware of these encouraging trends, but we still think the stock is worthy of further investigation.

If you want to know more about the risks facing Neugen Software Technologies, 1. Warning Signs Something you should know.

High returns are a key component of strong performance. free A list of stocks with strong balance sheets and high return on equity.

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