SW Umwelttechnik Stoiser & Wolschner (VIE:SWUT) Shareholders Will Want The ROCE Trajectory To Continue

By
Simply Wall St
Published
January 12, 2022
WBAG:SWUT
Source: Shutterstock

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

roce
WBAG:SWUT Return on Capital Employed January 12th 2022

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.