Today we’ll look at Wheaton Precious Metals Corp. (TSE:WPM) and reflect on its potential as an investment. In particular, we’ll consider its Return On Capital Employed (ROCE), as that can give us insight into how profitably the company is able to employ capital in its business.
First of all, we’ll work out how to calculate ROCE. Next, we’ll compare it to others in its industry. And finally, we’ll look at how its current liabilities are impacting its ROCE.
Return On Capital Employed (ROCE): What is it?
ROCE measures the amount of pre-tax profits a company can generate from the capital employed in its business. All else being equal, a better business will have a higher ROCE. Ultimately, it is a useful but imperfect metric. Author Edwin Whiting says to be careful when comparing the ROCE of different businesses, since ‘No two businesses are exactly alike.
So, How Do We Calculate ROCE?
Analysts use this formula to calculate return on capital employed:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
Or for Wheaton Precious Metals:
0.014 = US$88m ÷ (US$6.3b – US$34m) (Based on the trailing twelve months to September 2019.)
So, Wheaton Precious Metals has an ROCE of 1.4%.
Is Wheaton Precious Metals’s ROCE Good?
ROCE can be useful when making comparisons, such as between similar companies. We can see Wheaton Precious Metals’s ROCE is meaningfully below the Metals and Mining industry average of 3.2%. This performance could be negative if sustained, as it suggests the business may underperform its industry. Putting aside Wheaton Precious Metals’s performance relative to its industry, its ROCE in absolute terms is poor – considering the risk of owning stocks compared to government bonds. Readers may wish to look for more rewarding investments.
Wheaton Precious Metals’s current ROCE of 1.4% is lower than 3 years ago, when the company reported a 4.3% ROCE. This makes us wonder if the business is facing new challenges. You can see in the image below how Wheaton Precious Metals’s ROCE compares to its industry. Click to see more on past growth.
When considering this metric, keep in mind that it is backwards looking, and not necessarily predictive. Companies in cyclical industries can be difficult to understand using ROCE, as returns typically look high during boom times, and low during busts. This is because ROCE only looks at one year, instead of considering returns across a whole cycle. Remember that most companies like Wheaton Precious Metals are cyclical businesses. Since the future is so important for investors, you should check out our free report on analyst forecasts for Wheaton Precious Metals.
Do Wheaton Precious Metals’s Current Liabilities Skew Its ROCE?
Short term (or current) liabilities, are things like supplier invoices, overdrafts, or tax bills that need to be paid within 12 months. Due to the way ROCE is calculated, a high level of current liabilities makes a company look as though it has less capital employed, and thus can (sometimes unfairly) boost the ROCE. To counteract this, we check if a company has high current liabilities, relative to its total assets.
Wheaton Precious Metals has total liabilities of US$34m and total assets of US$6.3b. As a result, its current liabilities are equal to approximately 0.5% of its total assets. Wheaton Precious Metals has very few current liabilities, which have a minimal effect on its already low ROCE.
The Bottom Line On Wheaton Precious Metals’s ROCE
Nonetheless, there may be better places to invest your capital. Of course, you might also be able to find a better stock than Wheaton Precious Metals. So you may wish to see this free collection of other companies that have grown earnings strongly.
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Record investment in MB highways in store for 2023 – DiscoverWestman.com
MLA for Turtle Mountain, Doyle Piwniuk, says he’s looking forward the New Year as one full of accomplishments.
“I’m very optimistic, we have a very big year going forward provincially,” he explains. “We’re looking at economic development, reconstructing of more highways, like Hwy 23 in the region, and we have more highways to fix. Going forward in 2023 there will be a record investment in our highways.”
“It’s also going to be a good year for the Turtle Mountains area too because of the opportunities at the International Peace Garden and the economic development in the different communities. I believe we are going to have a very bright 2023,” adds Piwniuk.
“On behalf of my family to your family, I want to wish you a very merry Christmas and a happy New Year,” he shares. “And, any time you want to get ahold of me please contact email@example.com or you can call our number at 204-552-0130.”
Choose Your Investment Guru Wisely – Forbes
If you want to learn how to play tennis, it makes more sense to take the Masterclass from Serena Williams than to watch a random infomercial or a video from your high school coach. If you want to learn about investing you should also seek out the best.
Warren Buffett is verifiably the best investor of all time, with an audited track record going back several decades. Why, then, do so many would-be investors choose other role models, who all too often turn out to be hucksters and hacks—or just plain misguided?
I’ve asked the question many times. I’ve posed it to my NYU finance students each semester for over 20 years. Still, there’s no satisfying answer. I could hardly believe it when Bloomberg reported that Caroline Ellison of Alameda, FTX, and crypto infamy (and the former girlfriend of Sam Bankman-Fried) had supposedly learned investment strategies from Edwin Lefèvre’s Reminiscences of a Stock Operator, a roman à clef based on the life of Jesse Livermore, the stock trader who made a fortune shorting stocks before the 1906 San Francisco earthquake.
I’ve heard other young stock enthusiasts cite the book before. In 2021, Business Insider published a profile of 20 ambitious teen traders. One even mentioned Reminiscences as a favorite book. It’s one thing to read this book as entertainment. It’s another thing entirely to read it as an instruction manual. That’s because the book was published in 1923—long before Jesse Livermore’s last act.
At the age of 14, young Livermore had his first job posting stock quotes at the Boston branch of Paine Webber. His colorful life makes for great artistic inspiration and Lefèvre was probably unable to resist the allure. Livermore made and lost his fortune many times, not a sign of a good investor but rather the clear profile of a gambler and speculator. Livermore was a flamboyant character. He had a railcar, yacht and an extravagant apartment on the Upper West Side. He belonged to exclusive clubs and kept many mistresses. In the panic of 1907, Livermore made a million dollars in a single day. This was real money back then. But by 1915 he had filed for bankruptcy—and not for the first time. In the end, he lost his entire fortune and filed for bankruptcy a third time. This was in 1934, when his assets were listed at $84,000 and his debts at $2.5 million. That was his final business act. His final personal act was to shoot himself to death in the cloakroom of the Sherry-Netherland hotel in Manhattan on Thanksgiving Day, 1940.
In an era where people get their news from TikTok and Instagram, it’s not surprising that they would take the same dumb approach to learning about investing. But if you ever base your investment technique on a novel, be sure you know the ending of the real story first.
Government of Canada announces investment in three Waterloo Region tech businesses – ITBusiness.ca
Today, the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) announced an investment of more than $10 million in three Kitchener-Waterloo tech companies.
Miovision Technologies is a Kitchener-based company that lets cities and towns reduce traffic congestion and vehicle emissions while improving public safety through intelligent transportation solutions. With the $7.4-million repayable investment through the Jobs and Growth Fund, Miovision will develop TrafficLink and Scout, its traffic monitoring hardware and software. It also plans to increase its network by up to 100,000 intersections in North America over the next four years, and will further its transition into “Smart City” technologies, expanding its presence globally and adding 58 jobs,
Advanced Electrophoresis Solutions Ltd. is a Cambridge medical technology manufacturer specializing in the development of testing instruments for pharmaceutical companies to analyze protein structures and interactions. The repayable investment of over $1.7 million, through the Business Scale-up and Productivity stream, will allow the company to increase the production of ready-to-use customized testing instruments, and grow its sales and marketing team. Advanced Electrophoresis Solutions is looking to expand its presence in Asia and Europe while also creating 11 additional jobs within Waterloo.
Huron Digital Pathology is a St. Jacobs-based medical equipment company that develops digital imaging solutions in the pathology field for the clinical, research and education markets. With the $1-million repayable investment through the Business Scale-up and Productivity stream, the company can increase the production of its digital pathology scanners. It hopes to revolutionize disease diagnosis by being the first company to bring to market an Artificial Intelligence (AI) enabled image search engine for use in the pathology field. Huron Digital Pathology is looking to increase its productivity. with the goal of producing over 100 scanners every year and creating 11 skilled jobs.
“Tech companies, like the three highlighted today, are what builds Waterloo region’s growing resumé of research and innovation. Canadian tech companies work tirelessly to bring new products and processes to markets that will benefit our regional economy and Canadians,” said The Honourable Filomena Tassi, Minister responsible for the Federal Economic Development Agency for Southern Ontario. “The Government of Canada is committed to supporting businesses as they adopt new digital solutions, enhance global competitiveness and create local jobs that will contribute to a growing economy that works for everyone.”
Most B.C. residents under 60 have been infected with COVID-19 or vaccinated: study – Prince Rupert Northern View – The Northern View
Bedard, Fantilli headline Canada’s selection camp roster for 2023 World Juniors – Sportsnet.ca
Record investment in MB highways in store for 2023 – DiscoverWestman.com
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