AGRANA Beteiligungs-Aktiengesellschaft (VIE:AGR) Is Looking To Continue Growing Its Returns On Capital

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. So when we looked at AGRANA Beteiligungs-Aktiengesellschaft (VIE:AGR) and its trend of ROCE, we really liked what we saw.

What Is 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. Analysts use this formula to calculate it for AGRANA Beteiligungs-Aktiengesellschaft:

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

0.056 = €104m ÷ (€2.6b - €793m) (Based on the trailing twelve months to August 2024).

Therefore, AGRANA Beteiligungs-Aktiengesellschaft has an ROCE of 5.6%. In absolute terms, that's a low return and it also under-performs the Food industry average of 11%.

Check out our latest analysis for AGRANA Beteiligungs-Aktiengesellschaft

Historical performance is a great place to start when researching a stock so above you can see the gauge for AGRANA Beteiligungs-Aktiengesellschaft's ROCE against it's prior returns. If you're interested in investigating AGRANA Beteiligungs-Aktiengesellschaft's past further, check out this free graph covering AGRANA Beteiligungs-Aktiengesellschaft's past earnings, revenue and cash flow.

So How Is AGRANA Beteiligungs-Aktiengesellschaft's ROCE Trending?

AGRANA Beteiligungs-Aktiengesellschaft is showing promise given that its ROCE is trending up and to the right. The figures show that over the last five years, ROCE has grown 195% 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 Key Takeaway

To bring it all together, AGRANA Beteiligungs-Aktiengesellschaft has done well to increase the returns it's generating from its capital employed. Astute investors may have an opportunity here because the stock has declined 19% in the last five years. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

On a separate note, we've found 4 warning signs for AGRANA Beteiligungs-Aktiengesellschaft you'll probably want to know about.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high 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.