What should you know about the capital returns of Qualys Inc. (NASDAQ: QLYS)? – Simply Wall St News

The content of this article will benefit those of you who are beginning to learn about stock market investing
and seeking to evaluate the potential return on investment in Qualys Inc. (NASDAQ: QLYS).

Qualys Purchases gives you a stake in the company.
Your share of capital is given in exchange for the capital provided to the company and, for an investment to be successful, the company must generate income from the funds that make up that capital.
This is because the actual cash flows generated by the business dictate the potential for income (dividends) and capital appreciation (price increases), which are the two ways to obtain positive returns when buying an action.
Therefore, looking at how well Qualys is able to use the capital to generate profits will help us understand your potential return. Investors use many different metrics, but the badysis below focuses on Return on Investment (ROCE). Let's take a look at what he can tell us.

See our latest badysis for Qualys

What is Return on Capital Employed (ROCE)?

Choosing to invest in Qualys is tantamount to investing in another potentially favorable business.
Therefore, everything else, your investment in a certain company represents a vote of confidence that the money used to buy the stock will become larger than if invested elsewhere. The ability of the company to increase the size of your capital is therefore very important and can be evaluated by comparing the return on capital you can get on your investment with a rate of return that depends on other performance opportunities that you can identify.
A good measure to use is Return on Capital Employed (ROCE), which helps us badess how much revenue can be created from the funds needed to run the business. This measure will tell us if Qualys is good for developing investors' capital.
Take a look at the formula box below:

The above calculation shows that QLYS earnings were 10.75% of the capital employed.
By comparing this to a healthy benchmark of 15%, Qualys is currently unable to return the desired amount to homeowners for the use of their capital, which is not favorable to investors who have given up their investment. Other potentially strong companies.

What is the cause?

The relatively low ROCE of Qualys is linked to the movement by two factors that evolve over time: profits and capital requirements. At the moment, Qualys is in an unfavorable position, but that may change if these factors improve.
For this reason, it is important to look beyond the final value of QLYS ROCE and understand what happens to the individual components.
The review of the three-year period shows us that QLYS has boosted return on capital employed by 8.46%.
Similarly, the evolution of the profit variable shows a jump of 14.63 million US dollars to 42.41 million
The amount of capital employed has also increased, but in a proportionately smaller volume, suggesting that the higher ROCE is due to earnings growth relative to capital requirements.

Next Steps

ROCE for QLYS Investors is below the desired level at this time, however
the company has triggered an upward trend in recent years, which could be the occasion of a solid long-term return on investment.
But do not forget, the return on capital employed is a static measure that should be considered in conjunction with other fundamental indicators like
future prospects and evaluation to determine
if there is an opportunity that is not apparent by looking at the past data.
If you are interested in diving deeper, take a look at what I have linked below for more information on these fundamentals and other potential investment opportunities.

1. Future Outlook : Which are the well-informed industry badysts predicting the future growth of QLYS? Take a look at our free research report on the consensus of badysts for QLYS perspectives
2. Valuation : What is the QLYS worth today? Despite the unattractive ROCE, are the prospects correctly taken into account in the price? The infographic of intrinsic value in our free research report helps visualize whether QLYS is currently undervalued by the market.
3. Other successful stocks : Are there any other stocks offering better prospects with a proven track record? Explore our free list of these great actions here.

To help readers see past short-term volatility in the financial market, we aim to provide you with a long-term focused research badysis that is purely fundamentally focused. Note that our badysis does not take into account the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, had no position in the actions mentioned. For errors that need to be corrected, please contact the publisher at [email protected]