A Look Into Americana Restaurants International's (ADX:AMR) Impressive Returns On Capital

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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So, when we ran our eye over Americana Restaurants International's (ADX:AMR) trend of ROCE, we really liked what we saw.

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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 Americana Restaurants International:

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

0.27 = US$230m ÷ (US$1.5b - US$692m) (Based on the trailing twelve months to June 2025).

Therefore, Americana Restaurants International has an ROCE of 27%. On its own, that's a very good return and it's on par with the returns earned by companies in a similar industry.

See our latest analysis for Americana Restaurants International

In the above chart we have measured Americana Restaurants International'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 Americana Restaurants International for free.

What Can We Tell From Americana Restaurants International's ROCE Trend?

It's hard not to be impressed by Americana Restaurants International's returns on capital. The company has employed 60% more capital in the last five years, and the returns on that capital have remained stable at 27%. Now considering ROCE is an attractive 27%, this combination is actually pretty appealing because it means the business can consistently put money to work and generate these high returns. If Americana Restaurants International can keep this up, we'd be very optimistic about its future.

On a side note, Americana Restaurants International's current liabilities are still rather high at 45% of total assets. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

What We Can Learn From Americana Restaurants International's ROCE

In short, we'd argue Americana Restaurants International has the makings of a multi-bagger since its been able to compound its capital at very profitable rates of return. However, over the last year, the stock hasn't provided much growth to shareholders in the way of total returns. For that reason, savvy investors might want to look further into this company in case it's a prime investment.

While Americana Restaurants International looks impressive, no company is worth an infinite price. The intrinsic value infographic for AMR helps visualize whether it is currently trading for a fair price.

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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.