Returns On Capital Are Showing Encouraging Signs At Billboard AD (BUL:BBRD)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Billboard AD (BUL:BBRD) so let's look a bit deeper.

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. To calculate this metric for Billboard AD, this is the formula:

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

0.089 = лв2.9m ÷ (лв43m - лв10m) (Based on the trailing twelve months to September 2024).

Thus, Billboard AD has an ROCE of 8.9%. In absolute terms, that's a low return but it's around the Media industry average of 10%.

View our latest analysis for Billboard 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 Billboard AD's past further, check out this free graph covering Billboard AD's past earnings, revenue and cash flow.

So How Is Billboard AD's ROCE Trending?

Billboard AD's ROCE growth is quite impressive. The figures show that over the last five years, ROCE has grown 73% whilst employing roughly the same amount of capital. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. 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 Billboard AD's ROCE

To sum it up, Billboard AD is collecting higher returns from the same amount of capital, and that's impressive. Considering the stock has delivered 12% to its stockholders over the last five years, it may be fair to think that investors aren't fully aware of the promising trends yet. So with that in mind, we think the stock deserves further research.

One final note, you should learn about the 3 warning signs we've spotted with Billboard AD (including 2 which are significant) .

While Billboard AD isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.