There's Been No Shortage Of Growth Recently For Fazerles AD's (BUL:FZLS) Returns On Capital

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. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Fazerles AD (BUL:FZLS) and its trend of ROCE, we really liked what we saw.

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. The formula for this calculation on Fazerles AD is:

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

0.014 = лв309k ÷ (лв24m - лв1.6m) (Based on the trailing twelve months to March 2023).

Therefore, Fazerles AD has an ROCE of 1.4%. In absolute terms, that's a low return and it also under-performs the Forestry industry average of 13%.

View our latest analysis for Fazerles AD

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating Fazerles AD's past further, check out this free graph of past earnings, revenue and cash flow.

SWOT Analysis for Fazerles AD

So How Is Fazerles AD's ROCE Trending?

We're delighted to see that Fazerles AD is reaping rewards from its investments and has now broken into profitability. While the business was unprofitable in the past, it's now turned things around and is earning 1.4% on its capital. While returns have increased, the amount of capital employed by Fazerles AD has remained flat over the period. With no noticeable increase in capital employed, it's worth knowing what the company plans on doing going forward in regards to reinvesting and growing the business. So if you're looking for high growth, you'll want to see a business's capital employed also increasing.

Our Take On Fazerles AD's ROCE

To bring it all together, Fazerles AD has done well to increase the returns it's generating from its capital employed. Given the stock has declined 15% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

If you'd like to know more about Fazerles AD, we've spotted 5 warning signs, and 3 of them are significant.

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.