Hutchison Telecommunications (Australia)’s (ASX:HTA) Returns On Capital Are Heading Higher
If you’re looking for a multi-bagger, there’s a few things to keep an eye out for. Firstly, we’ll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base 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. With that in mind, we’ve noticed some promising trends at Hutchison Telecommunications (Australia) (ASX:HTA) so let’s look a bit deeper.
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For those that aren’t sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Hutchison Telecommunications (Australia):
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.024 = AU$577k ÷ (AU$75m – AU$51m) (Based on the trailing twelve months to December 2024).
So, Hutchison Telecommunications (Australia) has an ROCE of 2.4%. Ultimately, that’s a low return and it under-performs the Wireless Telecom industry average of 12%.
View our latest analysis for Hutchison Telecommunications (Australia)
ASX:HTA Return on Capital Employed April 11th 2025
Historical performance is a great place to start when researching a stock so above you can see the gauge for Hutchison Telecommunications (Australia)’s ROCE against it’s prior returns. If you’re interested in investigating Hutchison Telecommunications (Australia)’s past further, check out this free graph covering Hutchison Telecommunications (Australia)’s past earnings, revenue and cash flow .
We’re delighted to see that Hutchison Telecommunications (Australia) is reaping rewards from its investments and has now broken into profitability. While the business is profitable now, it used to be incurring losses on invested capital four years ago. Additionally, the business is utilizing 97% less capital than it was four years ago, and taken at face value, that can mean the company needs less funds at work to get a return. Hutchison Telecommunications (Australia) could be selling under-performing assets since the ROCE is improving.
On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities. Effectively this means that suppliers or short-term creditors are now funding 68% of the business, which is more than it was four years ago. And with current liabilities at those levels, that’s pretty high.
Story Continues
In a nutshell, we’re pleased to see that Hutchison Telecommunications (Australia) has been able to generate higher returns from less capital. Although the company may be facing some issues elsewhere since the stock has plunged 84% in the last five years. In any case, we believe the economic trends of this company are positive and looking into the stock further could prove rewarding.
Hutchison Telecommunications (Australia) does have some risks, we noticed 3 warning signs (and 1 which doesn’t sit too well with us) we think you should know about.
While Hutchison Telecommunications (Australia) may not currently earn the highest returns, we’ve compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.
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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.
