Discover How Atour Lifestyle Holdings (NASDAQ: ATAT) Masterfully Executes Capital Allocation Strategies

Looking for a potential multi-bagger? Keep an eye on certain trends. One key indicator is the return on capital employed (ROCE). A growing ROCE alongside an expanding base of capital employed tells us a company is doing well at reinvesting its profits. This is the case with Atour Lifestyle Holdings (NASDAQ:ATAT). Let’s dive into what their ROCE tells us.

ROCE measures how effectively a company generates profit from its capital. The formula is simple:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

For Atour Lifestyle Holdings, this works out to:

0.31 = CN¥1.4b ÷ (CN¥7.2b – CN¥2.6b) (Data from the twelve months ending September 2024).

This gives Atour Lifestyle Holdings an impressive ROCE of 31%. This is significantly higher than the hospitality industry average of 9.3%. That’s a positive sign.

While past performance is important, future projections matter too. Reviewing analysts’ forecasts can provide insights into where Atour Lifestyle Holdings is headed.

When we examine Atour Lifestyle Holdings’ ROCE trend, we see good news. Over the past four years, their returns on capital have climbed steadily to 31%. This means they’re earning more on each dollar invested. Plus, they’ve increased the capital employed by 339%. This shows strong potential for future growth.

In summary, Atour Lifestyle Holdings has demonstrated an ability to effectively reinvest its capital and earn higher returns. The stock has delivered a solid 63% return to shareholders in the last year, indicating that investors are starting to take notice. If Atour continues on this path, it could have a promising future.

However, it’s also essential to think about valuation. It might be helpful to explore intrinsic value estimations for Atour Lifestyle Holdings. Additionally, many other companies are generating impressive returns as well, and you can find lists of those with solid fundamentals.