Returns At B.O.S. Better Online Solutions (NASDAQ:BOSC) Are On The Way Up

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. With that in mind, we've noticed some promising trends at B.O.S. Better Online Solutions (NASDAQ:BOSC) so let's look a bit deeper.

What Is Return On Capital Employed (ROCE)?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for B.O.S. Better Online Solutions, this is the formula:

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

0.11 = US$2.4m ÷ (US$34m - US$11m) (Based on the trailing twelve months to March 2024).

So, B.O.S. Better Online Solutions has an ROCE of 11%. On its own, that's a standard return, however it's much better than the 8.1% generated by the Communications industry.

See our latest analysis for B.O.S. Better Online Solutions

roce

Above you can see how the current ROCE for B.O.S. Better Online Solutions compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for B.O.S. Better Online Solutions .

How Are Returns Trending?

The trends we've noticed at B.O.S. Better Online Solutions are quite reassuring. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 11%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 47%. So we're very much inspired by what we're seeing at B.O.S. Better Online Solutions thanks to its ability to profitably reinvest capital.

What We Can Learn From B.O.S. Better Online Solutions' ROCE

All in all, it's terrific to see that B.O.S. Better Online Solutions is reaping the rewards from prior investments and is growing its capital base. Since the stock has only returned 8.2% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

One more thing, we've spotted 1 warning sign facing B.O.S. Better Online Solutions that you might find interesting.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.

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