BluMetric Environmental (CVE:BLM) Shareholders Will Want The ROCE Trajectory To Continue

To find a multi-bagger stock, what are the underlying trends we should look for in a business? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, BluMetric Environmental (CVE:BLM) looks quite promising in regards to its trends of return on capital.

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Understanding 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 BluMetric Environmental:

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

0.042 = CA$1.0m ÷ (CA$37m - CA$13m) (Based on the trailing twelve months to March 2025).

Thus, BluMetric Environmental has an ROCE of 4.2%. Ultimately, that's a low return and it under-performs the Commercial Services industry average of 9.4%.

See our latest analysis for BluMetric Environmental

In the above chart we have measured BluMetric Environmental's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for BluMetric Environmental .

How Are Returns Trending?

The fact that BluMetric Environmental is now generating some pre-tax profits from its prior investments is very encouraging. The company was generating losses five years ago, but now it's earning 4.2% which is a sight for sore eyes. In addition to that, BluMetric Environmental is employing 375% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 35%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. This tells us that BluMetric Environmental has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

The Bottom Line On BluMetric Environmental's ROCE

Overall, BluMetric Environmental gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. Since the stock has returned a staggering 840% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if BluMetric Environmental can keep these trends up, it could have a bright future ahead.

One more thing to note, we've identified 5 warning signs with BluMetric Environmental and understanding these should be part of your investment process.

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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.