Nasdaq
华尔街日报Hallador Energy (NASDAQ:HNRG) Is Investing Its Capital With Increasing Efficiency
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Speaking of which, we noticed some great changes in Hallador Energy's (NASDAQ:HNRG) returns on capital, so let's have a look.
What Is Return On Capital Employed (ROCE)?
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. To calculate this metric for Hallador Energy, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.26 = US$53m ÷ (US$409m - US$207m) (Based on the trailing twelve months to September 2025).
Therefore, Hallador Energy has an ROCE of 26%. In absolute terms that's a great return and it's even better than the Renewable Energy industry average of 4.2%.
See our latest analysis for Hallador Energy
In the above chart we have measured Hallador Energy's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Hallador Energy .
What The Trend Of ROCE Can Tell Us
We're pretty happy with how the ROCE has been trending at Hallador Energy. The data shows that returns on capital have increased by 913% over the trailing five years. The company is now earning US$0.3 per dollar of capital employed. In regards to capital employed, Hallador Energy appears to been achieving more with less, since the business is using 39% less capital to run its operation. Hallador Energy may be selling some assets so it's worth investigating if the business has plans for future investments to increase returns further still.
For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. Effectively this means that suppliers or short-term creditors are now funding 51% of the business, which is more than it was five years ago. And with current liabilities at those levels, that's pretty high.
What We Can Learn From Hallador Energy's ROCE
From what we've seen above, Hallador Energy has managed to increase it's returns on capital all the while reducing it's capital base. And a remarkable 1,772% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Hallador Energy can keep these trends up, it could have a bright future ahead.
If you'd like to know more about Hallador Energy, we've spotted 2 warning signs, and 1 of them shouldn't be ignored.
If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets 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.