Yahoo Finance B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (AMS:PORF) Shareholders Will Want The ROCE Trajectory To Continue
If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. So when we looked at B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (AMS:PORF) and its trend of ROCE, we really liked what we saw.
Return On Capital Employed (ROCE): What Is It?
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. To calculate this metric for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.024 = €807k ÷ (€37m - €3.1m) (Based on the trailing twelve months to June 2023).
Therefore, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has an ROCE of 2.4%. In absolute terms, that's a low return and it also under-performs the Consumer Durables industry average of 10%.
See our latest analysis for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653
Historical performance is a great place to start when researching a stock so above you can see the gauge for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's ROCE against it's prior returns. If you want to delve into the historical earnings, revenue and cash flow of B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653, check out these free graphs here.
How Are Returns Trending?
We're delighted to see that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 2.4% on its capital. In addition to that, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 is employing 107% more capital than previously which is expected of a company that's trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.
In Conclusion...
Long story short, we're delighted to see that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's reinvestment activities have paid off and the company is now profitable. And with a respectable 47% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.
B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 does come with some risks though, we found 4 warning signs in our investment analysis, and 1 of those can't be ignored...
While B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.
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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.
