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Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in KnowBe4's (NASDAQ:KNBE) returns on capital, so let's have a look.

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on KnowBe4 is:

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

0.034 = US$12m (US$606m - US$259m) (Based on the trailing twelve months to June 2022).

Thus, KnowBe4 has an ROCE of 3.4%. Ultimately, that's a low return and it under-performs the Software industry average of 10%.

View our latest analysis for KnowBe4

Above you can see how the current ROCE for KnowBe4 compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering KnowBe4 here for free.

The fact that KnowBe4 is now generating some pre-tax profits from its prior investments is very encouraging. About three years ago the company was generating losses but things have turned around because it's now earning 3.4% on its capital. In addition to that, KnowBe4 is employing 581% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

On a related note, the company's ratio of current liabilities to total assets has decreased to 43%, which basically reduces it's funding from the likes of short-term creditors or suppliers. So this improvement in ROCE has come from the business' underlying economics, which is great to see. Nevertheless, there are some potential risks the company is bearing with current liabilities that high, so just keep that in mind.

In summary, it's great to see that KnowBe4 has managed to break into profitability and is continuing to reinvest in its business. Astute investors may have an opportunity here because the stock has declined 15% in the last year. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

One more thing, we've spotted 1 warning sign facing KnowBe4 that you might find interesting.

While KnowBe4 isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

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Returns At KnowBe4 (NASDAQ:KNBE) Are On The Way Up - Simply Wall St

Insiders at Open Text Corporation (NASDAQ:OTEX) sold US$7.9m worth of stock at an average price of US$53.22 a share over the past year, making the most of their investment. The company's market valuation decreased by US$423m after the stock price dropped 4.0% over the past week, but insiders were spared from painful losses.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Open Text

The Vice Chairman, Mark Barrenechea, made the biggest insider sale in the last 12 months. That single transaction was for US$5.7m worth of shares at a price of US$54.89 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$38.23). So it may not tell us anything about how insiders feel about the current share price.

In total, Open Text insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Open Text insiders own about US$169m worth of shares (which is 1.7% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

It doesn't really mean much that no insider has traded Open Text shares in the last quarter. While we feel good about high insider ownership of Open Text, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Open Text. You'd be interested to know, that we found 2 warning signs for Open Text and we suggest you have a look.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. Its FREE.

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Open Text Corporation (NASDAQ:OTEX) insiders who sold US$7.9m worth of stock earlier this year are probably glad they did so as market cap slides to...

Earlier this month, posters started going up around Sydney advertising an event called In the Ops Room, with Palmer Luckey. Rather than an album launch or standup gig, this turned out to be a free talk given last week by the chief executive of a high-tech US defence company called Anduril.

The company has set up an Australian arm, and Luckey is in town to entice brilliant technologists in military engineering to sign on.

Anduril makes a software system called Lattice, an autonomous sensemaking and command & control platform with a strong surveillance focus which is used on the USMexico border. The company also produces flying drones and has a deal to produce three robotic submarines for Australia, with capabilities for surveillance, reconnaissance, and warfare.

The PR splash is unusual from the normally secretive world of military technology. But Luckeys talk opened a window onto the future as seen by a company transforming US & allied military capabilities with advanced technology.

Unlike most defence tech moguls, Luckey got his start in the world of immersive tech and gaming.

While at college, the Anduril founder had a brief stint at a military-affiliated mixed reality research lab at the University of Southern California, then set up his own virtual reality headset company called Oculus VR. In 2014, at the age of 21, Luckey sold Oculus to Facebook for US$2 billion.

In 2017 Luckey was fired by Facebook for reasons that were never made public. According to some reports, the issue was Luckeys support for the presidential campaign of Donald Trump.

Luckeys next move, with backing from right-wing venture capitalist Peter Thiels Founders Fund, was to set up Anduril.

Since Luckeys departure, Facebook (now known as Meta) has broadened its efforts beyond the virtual and augmented reality market. A forthcoming mixed reality headset plays a key role in its plans for a metaverse being pitched to business and industry as well as consumers.

We can see similar pivots from consumers to enterprise across the immersive tech industry. Magic Leap, makers of a much hyped mixed-reality headset, later imploded and re-emerged focusing on healthcare.

Read more: 'Potential for harm': Microsoft to make US$22 billion worth of augmented reality headsets for US Army

Microsofts mixed-reality headset, the HoloLens, was initially seen at international film festivals. However, the HoloLens 2, released in 2019, was marketed solely to businesses.

Then, in 2021, Microsoft won a ten-year, US$22 billion contract to provide the US Army with 120,000 head-mounted displays. Known as Integrated Visual Augmentation Systems, these headsets include a range of technologies such as thermal sensors, a heads-up display and machine learning for training situations.

Speaking to the Sydney audience on Thursday, Luckey framed his own shift to defence not as one of economic necessity, but of personal fulfilment. He described saying your job is worthless to new recruits in social media companies making games or augmented reality filters.

That kind of work is fun but ultimately meaningless, he says, whereas working for Anduril would be professionally fulfilling, spiritually fulfilling, fiscally fulfilling.

Not all technology workers would agree that defence contracts are spiritually fulfilling. In 2018, Google employees revolted against Project Maven, an AI effort for the Pentagon. Staff at Microsoft and Unity have also expressed consternation over military involvement.

The first audience question on Thursday asked Luckey about the risks of autonomous AI weapons run by software that can make its own decisions.

Luckey said he was worried about the potential of autonomy to do really spooky things, but much more concerned about very evil people using very basic AI. He suggested there was no moral high ground in refusing to work on autonomous weapons, as the alternative was less principled people working on them.

Luckey did say Anduril will always have a human in the loop: [The software] is not making any life or death decisions without a person whos directly responsible for that happening.

This may be current policy, but it seems at odds with Luckeys vision of the future of war. Earlier in the evening, he painted a picture:

Youre going to see much larger numbers of systems [in conflicts] you cant have, lets say, billions of robots that are all acting together, if they all have to be individually piloted directly by a person, its just not going to work, so autonomy is going to be critical for that.

Read more: UN fails to agree on 'killer robot' ban as nations pour billions into autonomous weapons research

Not everyone is as sanguine about the autonomous weapons arms race as Luckey. Thousands of scientists have pledged not to develop lethal autonomous weapons.

Australian AI expert Toby Walsh, among others, has made the case that the best time to ban such weapons is before theyre available.

My own research has explored the potential of immersive media technologies to help us imagine pathways to a future we want to live in.

Luckey seems to argue he wants the same: a use for these incredible technologies beyond augmented reality cat filters and worthless games. Unfortunately his vision of that future is in the zero-sum framing of an arms race, with surveillance and AI weapons at the core (and perhaps even billions of robots acting together).

During Luckeys talk, he mentioned that Anduril Australia is working on other projects beyond the robotic subs, but he couldnt share what these were.

Read more: Australia's pursuit of 'killer robots' could put the trans-Tasman alliance with New Zealand on shaky ground

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Virtual reality, autonomous weapons and the future of war: military tech startup Anduril comes to Australia - The Conversation

Apple disclosed serious security vulnerabilities for iPhones, iPads and Macs that could potentially allow attackers to take complete control of these devices.

Apple released two securityreports about the issue on Wednesday, although they didnt receive wide attention outside of tech publications.

Apples explanation of the vulnerability means a hacker could get full admin access to the device. That would allow intruders to impersonate the devices owner and subsequently run any software in their name, said Rachel Tobac, CEO of SocialProof Security.

Security experts have advised users to update affected devices the iPhone6S and later models; several models of the iPad, including the 5th generation and later, all iPad Pro models and the iPad Air 2; and Mac computers running MacOS Monterey. The flaw also affects some iPod models.

Apple did not say in the reports how, where or by whom the vulnerabilities were discovered. In all cases, it cited an anonymous researcher.

Commercial spyware companies such as Israels NSO Group are known for identifying and taking advantage of such flaws, exploiting them in malware that surreptitiously infects targets smartphones, siphons their contents and surveils the targets in real time.

NSO Group has been blacklisted by the U.S. Commerce Department. Its spyware is known to have been used in Europe, the Middle East, Africa and Latin America against journalists, dissidents and human rights activists.

Security researcher Will Strafach said he had seen no technical analysis of the vulnerabilities that Apple has just patched. The company has previously acknowledged similarly serious flaws and, in what Strafach estimated to be perhaps a dozen occasions, has noted that it was aware of reports that such security holes had been exploited.

The Associated Press

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Apple warns of security flaw for iPhones, iPads and Macs - The Free Press

In the middle of July, three big blue billboards went up in and around Jackson, Mississippi. Pregnant? You still have a choice, they informed passing motorists, inviting them to visit Mayday.Health to learn more. Anybody who did landed on a website that provides information about at-home abortion pills and ways to get them delivered anywhere in the United Statesincluding parts of the country, such as Mississippi, where abortions are now illegal under most circumstances.

A few days ago, the founders of the nonprofit that paid for the billboard ads, Mayday Health, received a subpoena from the office of the attorney general of Mississippi. (The state has already been at the center of recent debates about abortion: Dobbs v. Jackson Womens Health Organization, the ruling that overturned Roe v. Wade, upheld a Mississippi statute by allowing states to put strict limits on abortion.) The subpoena, which I have seen, demands a trove of documents about Mayday Health and its activities. It may be the first step in an effort to force Mayday Health to take down the billboards, or even to prosecute the organizations leaders for aiding and abetting criminal conduct.

Mayday Health is not backing down. This week, it is taking out a television ad on Mississippi channels and putting up 20 additional billboards. This makes the legal fight over the Jackson billboards a crucial test in two interrelated conflicts about abortion that are still coming into public view.

Read: The abortion-rights message that some activists hate

The first is that the availability of abortion pills, which are very safe and effective during the first three months of pregnancy, has transformed the stakes of the abortion fight. The pro-life movement has hoped that states new powers to shut down abortion providers will radically reduce the number of abortions around the country. The pro-choice movement has feared that the end of Roe will lead to a resurgence of back-alley abortions that seriously threaten womens health.

Yet the changes wrought by the recent Supreme Court ruling may turn out to be more contained than meets the eye: Legal restrictions on first-trimester abortions have become much harder to enforce because a simple pill can now be used to induce a miscarriage. Abortion by medication is widely available in large parts of the country; as Mayday Health points out on its website, even women who are residents in states where doctors cannot prescribe such pills can set up a temporary forwarding address and obtain them by mail.

The second brewing conflict is about limits on free speech. So long as abortions required an in-person medical procedure, the pro-life movement could hope to reduce them by shutting down local clinics offering the service. Now that comparatively cheap and convenient workarounds exist for most cases, effective curbs on abortion require the extra step of preventing people from finding out about these alternatives. That is putting many members of the pro-life movement, be they Mississippis attorney general or Republican legislators in several states who are trying to pass draconian restrictions on information and advice about abortions, on a collision course with the First Amendment.

Some limits on speech are reasonable. States do, for example, have a legitimate interest in banning advertisements for illegal drugs. If a cocaine dealer took out a billboard advertising his wares, the government should obviously be able to take it down. Especially when it comes to commercial speech, some common-sense restrictions on what people can say or claim have always existed and are well-justified.

But the laws that Republicans are now introducing in state legislatures around the country go far beyond such narrow limits on objectionable commercial speech. In South Carolina, for example, Republican legislators have recently sponsored a bill that would criminalize providing information to a pregnant woman, or someone seeking information on behalf of a pregnant woman, by telephone, internet, or any other mode of communication regarding self-administered abortions or the means to obtain an abortion, knowing that the information will be used, or is reasonably likely to be used, for an abortion.

Read: The coming rise of abortion as a crime

This lawwhich is modeled on draft legislation that the National Right to Life Committee is trying to get passed in many states around the countrywould seriously undermine the right to free speech. It could potentially make doctors in states where abortion is actually legal liable to prosecution for discussing their services with someone who calls them from a state where abortion is illegal. It could even outlaw basic forms of speech such as news stories containing information that might be used by someone seeking an abortion. Theoretically, even this article could fall under that proscription.

The subpoena issued by the office of Mississippis attorney general is objectionable for similar reasons. Mayday Health is not advertising a commercial product or service. The organization does not handle or distribute abortion pills. All it does is provide information. Although one could reasonably believe that the information Mayday Health is providing may be used to commit acts that are now illegal in some parts of the United States, a ban on informational speech that can be used for the purposes of lawbreaking would be unacceptably broad and vague. After all, would-be lawbreakers might also consult the blog posts of lawyers who explain how to object to an improper search of a vehicle or study the pages of a novel to figure out how to make a Molotov cocktail. Should the attorney or the novelist also be considered to have aided or abetted a crime?

Recent efforts to suppress speech about abortion would seriously undermine the nations ability to debate the topic openly and honestly. Anybody who believes in the importance of the First Amendment should oppose them. As Will Creeley, the legal director of the Foundation for Individual Rights and Expression, has pointed out, These proposals are a chilling attempt to stifle free speech Whether you agree with abortion or not is irrelevant. You have the right to talk about it.

In recent years, the wider debate about free speech has undergone a strange transformation. Historically, the American left staunchly defended the First Amendment because it recognized the central part that free speech played in the struggles against slavery and segregation, and in the fight for the rights of women and sexual minorities. But as establishment institutions, including universities and corporations, became more progressive, and parts of the left came to feel that they had a significant share in institutional power, the absolute commitment to free speech waned.

Progressives started to find the idea of restrictions on free speech appealing because they assumed that those making decisions about what to allow and what to ban would share their views and values. Today, some on the extremist left endorse restrictions on free speech, demanding campus speech codes and measures to force social-media sites to deplatform controversial commentators and censor what they claim is misinformation.

Mary Ziegler: Why exceptions for the life of the mother have disappeared

The transformation of the lefts position on freedom of speech has allowed both principled conservatives and the less-than-principled protagonists of the MAGA movement to cast themselves as defenders of the First Amendment. In the mind of many people, the cause of free speech has astoundingly quickly shifted from being associated with left-wing organizations such as the ACLU to becoming the property of right-leaning pundits and politicians.

This makes the new front in the fight over abortion rights an important reminder of why the left should never abandon the cause of free speech. If the left gives up on the core commitment to free speech, what people can say is as likely to be determined by the attorney general of Mississippi as it is by college deans or tech workers. Curbs on free expression have always been a tool of governments that seek to control the lives of their citizens and punish those who defy them. The same remains true today.

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Why Freedom of Speech Is the Next Abortion Fight - The Atlantic