Carvana (NYSE:CVNA) Is Experiencing Growth In Returns On Capital

Simply Wall St.12-12

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. One common approach is to try and find a company with returns on ...

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One common approach is to try and find a company with returns on ...</p>\n\n<a href=\"https://finance.yahoo.com/news/carvana-nyse-cvna-experiencing-growth-110042127.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":"BK4588","symbol_name":"碎股","start_time":0,"source_url":"https://finance.yahoo.com/news/carvana-nyse-cvna-experiencing-growth-110042127.html","article_id":"2490980122","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/cPZIfz2UAIoxQVfVuqVWjg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/c81cd85cb4b7d3ca5825dd1ac04873a7"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2490980122","pubTimestamp":1734001242,"columns":[],"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. One common approach is to try and find a company with returns on capital employed  that are increasing, in conjunction with a growing 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. So when we looked at Carvana  and its trend of ROCE, we really liked what we saw.For those who don't know, ROCE is a measure of a company's yearly pre-tax profit , relative to the capital employed in the business. To calculate this metric for Carvana, this is the formula:. Return on Capital Employed = Earnings Before Interest and Tax  ÷ . So, Carvana has an ROCE of 11%.  That's a relatively normal return on capital, and it's around the 13% generated by the Specialty Retail industry.Carvana does come with some risks though, we found 3 warning signs in our investment a","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","EBIT":"Harbor AlphaEdge Small Cap Earners ETF","BK4503":"景林资产持仓","BK4214":"汽车零售","BK4548":"巴美列捷福持仓","CVNA":"Carvana Co.","BK4585":"ETF&股票定投概念","NYSE":"纽交所"},"translate_title":"Carvana（纽约证券交易所股票代码：CVNA）的资本回报率正在增长","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CVNA":1,"EBIT":1,"NYSE":1},"content_text":"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. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing 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. So when we looked at Carvana (NYSE:CVNA) and its trend of ROCE, we really liked what we saw. \n What Is Return On Capital Employed (ROCE)? \n For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for Carvana, this is the formula: \n Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) \n0.11 = US$695m ÷ (US$7.4b - US$1.2b) (Based on the trailing twelve months to September 2024).\n So, Carvana has an ROCE of 11%.  That's a relatively normal return on capital, and it's around the 13% generated by the Specialty Retail industry. \n View our latest analysis for Carvana \n\n\n\n  NYSE:CVNA Return on Capital Employed December 12th 2024\n \n\n In the above chart we have measured Carvana'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 analyst report for Carvana . \n The Trend Of ROCE \n We're delighted to see that Carvana is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses five years ago, but now it's earning 11% which is a sight for sore eyes. Not only that, but the company is utilizing 428% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance. \n One more thing to note, Carvana has decreased current liabilities to 16% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. Therefore we can rest assured that the growth in ROCE is a result of the business' fundamental improvements, rather than a cooking class featuring this company's books. \n The Key Takeaway \n Overall, Carvana gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. Since the stock has returned a staggering 169% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Carvana can keep these trends up, it could have a bright future ahead. \n Carvana does come with some risks though, we found 3 warning signs in our investment analysis, and 1 of those is potentially serious... \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":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"dataReport","news_rank":0,"symbols":[],"gpt_button":1},"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":"4.29.3","shortVersion":"4.29.3","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/2490980122"}