Friday, June 9, 2023

The Slow Rate of Return on CCC Intelligent Solutions Holdings (NYSE:CCCS) Leaves Little Room for Excitement

What early trends should we look at to identify a stock that could increase in value over the long term? First, we want to identify the growing Return Over and above the Return on Capital Employed (ROCE), steadily increasing Base of capital employed. Ultimately, it shows that this is a business that is reinvesting profits at increasing rates of return. In light of that, when we see CCC Intelligent Solutions Holdings (NYSE:CCCS) and its ROCE trend, we weren’t exactly thrilled.

Return on Capital Employed (ROCE): What is it?

Just to clarify if you’re not sure, ROCE is a metric for evaluating how much pre-tax return (in percentage terms) a company generates on the capital it has invested in its business. The formula for this calculation at CCC Intelligent Solutions Holdings is:

Return on capital employed = Earnings before interest and taxes (EBIT) ÷ (Total assets – Current liabilities)

0.019 = US$61m ÷ (US$3.3b – US$144m) (Based on last twelve months to September 2022),

So, CCC Intelligent Solutions Holdings has a ROCE of 1.9%. Ultimately, this is diminishing returns and it underperforms the software industry average of 10%.

Check Out Our Latest Analysis for CCC Intelligent Solutions Holdings

NYSE: CCCS Return on Capital Employed December 18, 2022

Above you can see how the current ROCE for CCC Intelligent Solutions Holdings compares to its prior return on capital, but you can only tell so much from the past. If you’re interested, you can check out the analysts’ predictions in our free Reports on analyst forecasts for the company.

How are the returns trending?

Over the past two years, both CCC Intelligent Solutions Holdings’ ROCE and capital employed have been mostly flat. It is not unusual to see a mature and stable business that is not reinvesting its earnings because it has passed that stage of the business cycle. So don’t be surprised if CCC Intelligent Solutions Holdings doesn’t become a multi-bagger in a few years.

The Bottom Line on RoCE of CCC Intelligent Solutions Holdings

We can conclude that with respect to CCC Intelligent Solutions Holdings’ return on capital employed and trends, there is not much change to report. Since the stock has declined 22% over the past year, investors can’t be too optimistic about a revival in this trend. Overall, implicit trends are not typical of multi-baggers, so if that’s what you’re looking for, we think you might find luck elsewhere.

If you want to continue researching CCC Intelligent Solutions Holdings, you may be interested to learn about 1 warning sign that our analysis revealed.

While CCC Intelligent Solutions Holdings may not currently be generating the highest returns, we have compiled a list of companies that currently generate more than 25% return on equity. check it out free list here.

what are the risks and opportunities CCC Intelligent Solutions Holdings,

CCC Intelligent Solutions Holdings Inc. Provides cloud, mobile, AI, telematics, hyperscale technologies and applications for the property and casualty insurance economy.

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  • Earnings are expected to grow by 25.07% per annum


  • Shareholders have been diluted over the past year

View all Risks and Rewards

This Simply Wall St article is general in nature. We only provide commentary based on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock, and does not take into account 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 Street has no position in any of the stocks mentioned.

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