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LCI Industries (NYSE:) is currently underperforming with a Return on Capital Employed (ROCE) of 5.3%, falling short of the Auto Components industry’s average of 13%. This information comes in light of recent trends that suggest a high ROCE and capital deployment can be indicators of potential high-performing stocks.
The company’s returns have steadily deteriorated over the past five years, plummeting from 22% to the current 5.3%. Alongside this, LCI Industries has also been grappling with decreasing revenues, despite an increase in capital employment. These factors together raise concerns about the company’s future growth potential.
It is worth noting that, while a high ROCE is generally considered a positive signal for investors looking for potential multi-baggers, LCI Industries’ low figure indicates a less than optimal use of capital. This, coupled with the company’s declining revenues despite increased capital employment, may pose challenges for the company moving forward.
The Auto Components industry, where LCI Industries operates, boasts an average ROCE of 13%, significantly higher than that of LCI Industries. The stark contrast between the industry average and LCI Industries’ performance further emphasizes the company’s underwhelming financial performance.
In conclusion, while tracking trends like increasing ROCE and capital deployment can aid in identifying potential high-performing stocks, LCI Industries’ recent performance suggests it may be struggling to maintain growth and profitability.
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