Published on 22 Apr 2024 on Simply Wall St. via Yahoo Finance

Heidrick & Struggles International (NASDAQ:HSII) Will Be Hoping To Turn Its Returns On Capital...

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Although, when we looked at Heidrick & Struggles International (NASDAQ:HSII), it didn't seem to tick all of these boxes.

Return On Capital Employed (ROCE): What Is It?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Heidrick & Struggles International, this is the formula: