We love the feedback from Live Ventures (NASDAQ: LIVE) and here is their trend


Did you know that certain financial measures can provide clues about a potential multi-bagger? A common approach is to try to find a business with Return on capital employed (ROCE) which increases, in connection with growth amount capital employed. Put simply, these types of businesses are dialing machines, which means they continually reinvest their profits at ever higher rates of return. And in light of this, the trends that we are observing at Direct companies ” (NASDAQ: LIVE) looks very promising, so let’s take a look.

What is Return on Employee Capital (ROCE)?

If you’ve never worked with ROCE before, it measures the “return” (profit before tax) that a business generates on capital employed in its business. Analysts use this formula to calculate it for Live Ventures:

Return on capital employed = Profit before interest and taxes (EBIT) ÷ (Total assets – Current liabilities)

0.23 = $ 32 million ÷ ($ 196 million – $ 55 million) (Based on the last twelve months up to March 2021).

So, Live Ventures has a ROCE of 23%. In absolute terms, this is a great return and it’s even better than the consumer durables industry average of 14%.

NasdaqCM: LIVE Review of the capital employed June 7, 2021

Historical performance is a great place to start when looking for a stock. So above you can see the gauge of Live Ventures’ ROCE compared to past returns. If you want to delve into Live Ventures earnings, income and cash flow history, check out these free graphics here.

What does the ROCE trend tell us for direct businesses?

Live Ventures recently broke into profitability, so their past investments appear to be paying off. About five years ago the company was making losses, but things have changed as it now earns 23% on its equity. Not only that, but the business is using 394% more capital than before, but that’s to be expected of a business trying to become profitable. We like this trend because it tells us that the company has profitable reinvestment opportunities, and if it keeps moving forward it can lead to multi-bagger performance.

Live Ventures’ ROCE result

In short, we are delighted to see that Live Ventures’ reinvestment activities have paid off and the company is now profitable. And a remarkable 514% total return over the past five years tells us that investors are expecting more good things in the future. Therefore, we believe it would be worth checking out whether these trends will continue.

Like most businesses, Live Ventures comes with certain risks, and we’ve found 3 warning signs that you need to be aware of.

Live Ventures is not the only security that generates high returns. If you want to see more, check out our free List of companies delivering high returns on equity with strong fundamentals.

This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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