Yahoo Finance The Trends At Anpario (LON:ANP) That You Should Know About
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, the ROCE of Anpario (LON:ANP) looks decent, right now, so lets see what the trend of returns can tell us.
What is Return On Capital Employed (ROCE)?
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Anpario:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.12 = UK£4.4m ÷ (UK£42m - UK£4.0m) (Based on the trailing twelve months to June 2020).
Therefore, Anpario has an ROCE of 12%. On its own, that's a standard return, however it's much better than the 7.7% generated by the Food industry.
Check out our latest analysis for Anpario
In the above chart we have measured Anpario's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Anpario here for free.
So How Is Anpario's ROCE Trending?
While the current returns on capital are decent, they haven't changed much. The company has consistently earned 12% for the last five years, and the capital employed within the business has risen 47% in that time. 12% is a pretty standard return, and it provides some comfort knowing that Anpario has consistently earned this amount. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.
The Bottom Line On Anpario's ROCE
In the end, Anpario has proven its ability to adequately reinvest capital at good rates of return. And the stock has followed suit returning a meaningful 51% to shareholders over the last five years. So while the positive underlying trends may be accounted for by investors, we still think this stock is worth looking into further.
On a separate note, we've found 2 warning signs for Anpario you'll probably want to know about.
While Anpario isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
This article by Simply Wall St is general in nature. 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.
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