There's not a whole lot of outward appeal in Wall Street's bruised and battered stocks, with share prices that have taken quite a market beating. But that doesn't always mean that they're down for the count. With strong leadership behind them, even companies in dire straits have the potential to stage a comeback ...
But how can you measure the effectiveness of a company's management team? One way is to check out its efficiency ratios, which can reveal how well it uses its assets and manages its liabilities. For this particular list, we looked at return on assets, return on equity, and return on invested capital.
Return on assets measures a company's profitability in relation to its total assets, which gives us some indication of how efficiently management uses its assets to generate earnings. Since return on assets for public companies largely depends on the industry, and tends to vary widely, we used it as a comparative measure against previous numbers or those of similar companies.
Return on equity tells us how much profit a company is able to generate with the money invested by shareholders, indicating the amount of net income returned as a percentage of shareholder equity.
And return on invested capital gives us an idea of how effectively a company's invested capital is being allocated, comparing its return on capital (ROIC) with cost of capital. Simply put, the metric tells us how well a company uses money to generate returns.
Here is a list of management teams that have outperformed their competitors over the last year, according to these ratios. All of these companies have underperformed over the last quarter -- can these management teams turn things around for their stock? (Click here to access free, interactive tools to analyze these ideas.)
Management efficiency data sourced from Fidelity. The list has been sorted by quarterly performance.
|
Company |
Performance Over Last Quarter |
Management Performance Over Last Year |
|---|---|---|
|
NutriSystem |
-36.49% |
ROE at 34.47% vs. industry average at 25.42%. ROA at 20.96% vs. industry average at 10.22%. Return on Investments at 30.58% vs. industry average at 18.08% |
|
Dolby Laboratories |
-22.50% |
ROE at 20.29% vs. industry average at 9.33%. ROA at 17.5% vs. industry average at 5.87%. Return on Investments at 20.12% vs. industry average at 9.28% |
|
Genco Shipping & Trading Ltd. |
-19.50% |
ROE at 13.57% vs. industry average at 5.07%. ROA at 4.92% vs. industry average at 3.51%. Return on Investments at 5.5% vs. industry average at 2.88% |
|
Homex Development |
-19.46% |
ROE at 14.01% vs. industry average at 3.96%. ROA at 4.81% vs. industry average at 2.97%. Return on Investments at 6.07% vs. industry average at 5.27% |
|
Cninsure |
-18.69% |
ROE at 17.2% vs. industry average at 11.45%. ROA at 13.44% vs. industry average at 1.96%. Return on Investments at 16.97% vs. industry average at 6.92% |
Interactive Chart: Press Play to compare changes in market cap for the stocks mentioned above. Note: The numbers on top of items represent the forward P/E ratio, if available.
Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
