Avis Budget Group (NASDAQ:CAR) Is Looking To Continue Growing Its Returns On Capital

Simply Wall St.11-01

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. In a perfect world, we'd like to see a company investing more ...

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In a perfect world, we'd like to see a company investing more ...</p>\n\n<a href=\"https://finance.yahoo.com/news/avis-budget-group-nasdaq-car-130847469.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FT_SY_MNQ","symbol_name":"微型NQ100指数","start_time":0,"source_url":"https://finance.yahoo.com/news/avis-budget-group-nasdaq-car-130847469.html","article_id":"2480488955","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/SYyLLE_TGxESmxaHD10fMQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/976387f9691d9e9c613091b5dddac717"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2480488955","pubTimestamp":1730466527,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"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. 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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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So on that note, Avis Budget Group (NASDAQ:CAR) looks quite promising in regards to its trends of return on capital. \n Return On Capital Employed (ROCE): What Is It? \n Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Avis Budget Group, this is the formula: \n Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) \n0.068 = US$2.1b ÷ (US$34b - US$2.9b) (Based on the trailing twelve months to June 2024).\n Therefore, Avis Budget Group has an ROCE of 6.8%. On its own that's a low return on capital but it's in line with the industry's average returns of 7.1%. \n Check out our latest analysis for Avis Budget Group \n\n\n\n  NasdaqGS:CAR Return on Capital Employed November 1st 2024\n \n\n Above you can see how the current ROCE for Avis Budget Group compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Avis Budget Group  for free. \n What Does the ROCE Trend For Avis Budget Group Tell Us? \n Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 6.8%. The amount of capital employed has increased too, by 43%. 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. \n Our Take On Avis Budget Group's ROCE \n In summary, it's great to see that Avis Budget Group can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And a remarkable 184% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist. \n Avis Budget Group does come with some risks though, we found 3 warning signs in our investment analysis, and 2 of those are a bit unpleasant... \n For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"Business Data","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2480488955"}