Korado-Bulgaria AD (BUL:4KX): Are Investors Overlooking Returns On Capital?

Simply Wall St
February 07, 2021

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out 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. 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 the ROCE trend of Korado-Bulgaria AD (BUL:4KX) 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. Analysts use this formula to calculate it for Korado-Bulgaria AD:

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

0.23 = лв5.2m ÷ (лв30m - лв7.4m) (Based on the trailing twelve months to December 2020).

Therefore, Korado-Bulgaria AD has an ROCE of 23%. In absolute terms that's a great return and it's even better than the Building industry average of 10%.

View our latest analysis for Korado-Bulgaria AD

BUL:4KX Return on Capital Employed February 8th 2021

In the above chart we have measured Korado-Bulgaria AD's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free report for Korado-Bulgaria AD.

How Are Returns Trending?

Investors would be pleased with what's happening at Korado-Bulgaria AD. The data shows that returns on capital have increased substantially over the last five years to 23%. The amount of capital employed has increased too, by 32%. So we're very much inspired by what we're seeing at Korado-Bulgaria AD thanks to its ability to profitably reinvest capital.

The Bottom Line On Korado-Bulgaria AD's ROCE

All in all, it's terrific to see that Korado-Bulgaria AD is reaping the rewards from prior investments and is growing its capital base. And a remarkable 235% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Korado-Bulgaria AD can keep these trends up, it could have a bright future ahead.

On a separate note, we've found 2 warning signs for Korado-Bulgaria AD you'll probably want to know about.

High returns are a key ingredient to strong performance, so check out our free list ofstocks earning high returns on equity with solid balance sheets.

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This article by Simply Wall St is general in nature. 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.
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