Here's What To Make Of Bloom Health Partners' (CSE:BLMH) Decelerating Rates Of Return

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. In light of that, when we looked at Bloom Health Partners (CSE:BLMH) and its ROCE trend, we weren't exactly thrilled.

Understanding 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 Bloom Health Partners:

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

0.081 = CA$1.8m ÷ (CA$37m - CA$15m) (Based on the trailing twelve months to March 2022).

So, Bloom Health Partners has an ROCE of 8.1%. In absolute terms, that's a low return but it's around the Healthcare industry average of 7.2%.

Check out our latest analysis for Bloom Health Partners

Historical performance is a great place to start when researching a stock so above you can see the gauge for Bloom Health Partners' ROCE against it's prior returns. If you're interested in investigating Bloom Health Partners' past further, check out this free graph of past earnings, revenue and cash flow.

What Does the ROCE Trend For Bloom Health Partners Tell Us?

Over the past , Bloom Health Partners' ROCE and capital employed have both remained mostly flat. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. So don't be surprised if Bloom Health Partners doesn't end up being a multi-bagger in a few years time.

Our Take On Bloom Health Partners' ROCE

We can conclude that in regards to Bloom Health Partners' returns on capital employed and the trends, there isn't much change to report on. And in the last year, the stock has given away 43% so the market doesn't look too hopeful on these trends strengthening any time soon. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.

One more thing: We've identified 4 warning signs with Bloom Health Partners (at least 1 which doesn't sit too well with us) , and understanding these would certainly be useful.

While Bloom Health Partners 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.