Returns At SW Umwelttechnik Stoiser & Wolschner (VIE:SWUT) Are On The Way Up

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base 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. Speaking of which, we noticed some great changes in SW Umwelttechnik Stoiser & Wolschner's (VIE:SWUT) returns on capital, so let's have a look.

Understanding 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. The formula for this calculation on SW Umwelttechnik Stoiser & Wolschner is:

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

0.18 = €12m ÷ (€97m - €32m) (Based on the trailing twelve months to June 2021).

Thus, SW Umwelttechnik Stoiser & Wolschner has an ROCE of 18%. In absolute terms, that's a satisfactory return, but compared to the Construction industry average of 9.6% it's much better.

Check out our latest analysis for SW Umwelttechnik Stoiser & Wolschner

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how SW Umwelttechnik Stoiser & Wolschner has performed in the past in other metrics, you can view this free graph of past earnings, revenue and cash flow.

So How Is SW Umwelttechnik Stoiser & Wolschner's ROCE Trending?

SW Umwelttechnik Stoiser & Wolschner's ROCE growth is quite impressive. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 169% over the last five years. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

What We Can Learn From SW Umwelttechnik Stoiser & Wolschner's ROCE

As discussed above, SW Umwelttechnik Stoiser & Wolschner appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. And a remarkable 466% total return over the last five years tells us that investors are expecting more good things to come in the future. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

SW Umwelttechnik Stoiser & Wolschner does have some risks, we noticed 5 warning signs (and 1 which is concerning) we think you should know about.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.