Schoeller-Bleckmann Oilfield Equipment's (VIE:SBO) Returns On Capital Are Heading Higher

There are a few key trends to look for if we want to identify the next multi-bagger. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's 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 looked at Schoeller-Bleckmann Oilfield Equipment (VIE:SBO) and its trend of ROCE, we really liked what we saw.

What Is Return On Capital Employed (ROCE)?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for Schoeller-Bleckmann Oilfield Equipment, this is the formula:

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

0.17 = €101m ÷ (€903m - €291m) (Based on the trailing twelve months to June 2023).

So, Schoeller-Bleckmann Oilfield Equipment has an ROCE of 17%. In absolute terms, that's a satisfactory return, but compared to the Energy Services industry average of 8.2% it's much better.

Check out our latest analysis for Schoeller-Bleckmann Oilfield Equipment

In the above chart we have measured Schoeller-Bleckmann Oilfield Equipment'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 Schoeller-Bleckmann Oilfield Equipment here for free.

What Can We Tell From Schoeller-Bleckmann Oilfield Equipment's ROCE Trend?

Schoeller-Bleckmann Oilfield Equipment has not disappointed with their ROCE growth. The figures show that over the last five years, ROCE has grown 57% 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.

Our Take On Schoeller-Bleckmann Oilfield Equipment's ROCE

To bring it all together, Schoeller-Bleckmann Oilfield Equipment has done well to increase the returns it's generating from its capital employed. Given the stock has declined 32% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. So researching this company further and determining whether or not these trends will continue seems justified.

On a final note, we've found 1 warning sign for Schoeller-Bleckmann Oilfield Equipment that we think you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.