Invests Marten Transport, Ltd. (NASDAQ: MRTN) effective in his business?

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Today we look at Marten Transport, GmbH. (NASDAQ: MRTN) check whether this could be an attractive investment perspective. To be precise, we look at the return on capital employed (ROCE), as this affects our view of the quality of the business. "Data-reactid =" 27 "> Today we are going to Marten Transport, Ltd (NASDAQ: MRTN) to see if this is an attractive investment prospect. To be precise, the return on capital employed (ROCE) is used because this affects our assessment of the quality of the business.

First, we'll look at what ROCE is and how we calculate it. Then we compare the ROCE with similar companies. Finally, we will examine how short-term liabilities affect ROCE.

Understanding Return on Investment (ROCE)

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "ROCE measures the" return "(before taxes) Profit) a company generates from the capital invested in its business in general a higher ROCE is better overall it is a valuable measure that has its shortcomings The renowned investment researcher Michael Mauboussin has suggested A high ROCE can mean that a dollar invested in the company generates a value of more than one dollar. "data-reactid =" 30 "> The ROCE measures the return (profit before taxes) that a company generates from the capital invested. In general, a higher ROCE is better. Overall, it is a valuable indicator that has its shortcomings Renowned investment researcher Michael Mauboussin has suggested that a high ROCE may indicate that a dollar invested in the company generates more than EUR a dollar ’.

How do we calculate the ROCE?

The formula for calculating the return on investment is:

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Return on investment = earnings before interest and taxes (EBIT) ÷ (total assets – current liabilities)"data-reactid =" 33 ">Return on investment = earnings before interest and taxes (EBIT) ÷ (total assets – current liabilities)

Or for marten transport:

$ 0.099 = $ 69 million ($ 781 million – $ 85 million) (Based on the last twelve months to September 2019.)

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "So, Marten Transport has a ROCE of 9.9%. "data-reactid =" 36 "> So, Marten Transport has a ROCE of 9.9%.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = " Check out our latest analysis for Marten Transport "data-reactid =" 37 "> Check out our latest analysis for Marten Transport

Does marten transport have a good ROCE?

One way to evaluate ROCE is to compare similar companies. We can see that Marten Transport's ROCE averages 11% in the transportation industry. Regardless of where Marten Transport is located alongside its industry, the ROCE appears satisfactory in absolute terms, and this company could be worth a closer look.

The image below shows how Marten Transport's ROCE compares to its industry, and you can click on it to learn more details about past growth.

NasdaqGS: MRTN Past Revenue and Net Income, January 3, 2020

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "When you consider the ROCE, remember that it reflects The ROCE can be misleading for companies in the cyclical industry as returns are impressive during the boom times but very weak during the busts The ROCE is after all just a snapshot of a single year What happens in the future is for Quite important to investors free Analyst forecasts for Marten Transport, "data-reactid =" 53 "> When considering the ROCE, keep in mind that it reflects the past and does not necessarily predict the future. The ROCE can be misleading for companies in the cyclical industry, with returns looking impressive during boom times of the busts very weak. ROCE is after all just a snapshot of a single year. What happens in the future is quite important for investors free Analyst forecasts for Marten Transport.

Marten Transport's current liabilities and their impact on ROCE

Short-term (or short-term) liabilities are things like supplier bills, overdrafts or tax bills that must be paid within 12 months. Because of the way the ROCE equation works, the short-term maturity of large bills may seem like a company has less capital and therefore a higher ROCE than usual. To counteract this, investors can check whether a company has high short-term liabilities in relation to total assets.

Marten Transport has total assets of $ 781 million and short-term liabilities of $ 85 million. As a result, short-term liabilities amount to around 11% of total assets. Low short-term liabilities do not increase ROCE too much.

The conclusion of the ROCE from Marten Transport

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "In this sense, the ROCE from Marten Transport appears pretty good. Marten Transport is doing well under this analysis, But it is far from the only company that delivers excellent numbers , You may also want to check this free Collection of companies with excellent profit growth."data-reactid =" 58 "> Against this background, the ROCE from Marten Transport seems pretty good. But it is far from the only company that delivers excellent numbers , You may also want to check this free Collection of companies with excellent profit growth.

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If you are like me, you will Not want to miss that free List of growing companies that buy insiders."data-reactid =" 59 "> If you are like me, you will Not want to miss that free List of growing companies that buy insiders.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com, This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading."data-reactid =" 64 ">If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com. This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading.