SW Umwelttechnik Stoiser & Wolschner (VIE:SWUT) 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. 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.

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. 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).

So, SW Umwelttechnik Stoiser & Wolschner has an ROCE of 18%. On its own, that's a standard return, however it's much better than the 9.4% generated by the Construction industry.

Check out our latest analysis for SW Umwelttechnik Stoiser & Wolschner

Historical performance is a great place to start when researching a stock so above you can see the gauge for SW Umwelttechnik Stoiser & Wolschner's ROCE against it's prior returns. If you want to delve into the historical earnings, revenue and cash flow of SW Umwelttechnik Stoiser & Wolschner, check out these free graphs here.

What Can We Tell From SW Umwelttechnik Stoiser & Wolschner's ROCE Trend?

SW Umwelttechnik Stoiser & Wolschner's ROCE growth is quite impressive. The figures show that over the last five years, ROCE has grown 169% whilst employing roughly the same amount of capital. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

The Bottom Line On SW Umwelttechnik Stoiser & Wolschner's ROCE

In summary, we're delighted to see that SW Umwelttechnik Stoiser & Wolschner has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

One final note, you should learn about the 3 warning signs we've spotted with SW Umwelttechnik Stoiser & Wolschner (including 1 which shouldn't be ignored) .

While SW Umwelttechnik Stoiser & Wolschner isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.