Investors Met With Slowing Returns on Capital At AGRANA Beteiligungs-Aktiengesellschaft (VIE:AGR)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. In light of that, when we looked at AGRANA Beteiligungs-Aktiengesellschaft (VIE:AGR) and its ROCE trend, we weren't exactly thrilled.

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Understanding 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. 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)

0.031 = €52m ÷ (€2.5b - €882m) (Based on the trailing twelve months to May 2025).

Thus, AGRANA Beteiligungs-Aktiengesellschaft has an ROCE of 3.1%. In absolute terms, that's a low return and it also under-performs the Food industry average of 10%.

Check out our latest analysis for AGRANA Beteiligungs-Aktiengesellschaft

Above you can see how the current ROCE for AGRANA Beteiligungs-Aktiengesellschaft compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for AGRANA Beteiligungs-Aktiengesellschaft .

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

There hasn't been much to report for AGRANA Beteiligungs-Aktiengesellschaft's returns and its level of capital employed because both metrics have been steady for the past five years. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So unless we see a substantial change at AGRANA Beteiligungs-Aktiengesellschaft in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger. On top of that you'll notice that AGRANA Beteiligungs-Aktiengesellschaft has been paying out a large portion (72%) of earnings in the form of dividends to shareholders. If the company is in fact lacking growth opportunities, that's one of the viable alternatives for the money.

Another point to note, we noticed the company has increased current liabilities over the last five years. This is intriguing because if current liabilities hadn't increased to 35% of total assets, this reported ROCE would probably be less than3.1% because total capital employed would be higher.The 3.1% ROCE could be even lower if current liabilities weren't 35% of total assets, because the the formula would show a larger base of total capital employed. So while current liabilities isn't high right now, keep an eye out in case it increases further, because this can introduce some elements of risk.

The Key Takeaway

In a nutshell, AGRANA Beteiligungs-Aktiengesellschaft has been trudging along with the same returns from the same amount of capital over the last five years. And with the stock having returned a mere 1.9% in the last five years to shareholders, you could argue that they're aware of these lackluster trends. As a result, if you're hunting for a multi-bagger, we think you'd have more luck elsewhere.

Like most companies, AGRANA Beteiligungs-Aktiengesellschaft does come with some risks, and we've found 1 warning sign that 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.

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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.