Stock Analysis

We Think BELIMO Holding (VTX:BEAN) Might Have The DNA Of A Multi-Bagger

SWX:BEAN
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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. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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, the ROCE of BELIMO Holding (VTX:BEAN) looks great, so lets see what the trend can tell us.

Return On Capital Employed (ROCE): What Is It?

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. To calculate this metric for BELIMO Holding, this is the formula:

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

0.28 = CHF152m ÷ (CHF672m - CHF134m) (Based on the trailing twelve months to December 2022).

Thus, BELIMO Holding has an ROCE of 28%. That's a fantastic return and not only that, it outpaces the average of 20% earned by companies in a similar industry.

View our latest analysis for BELIMO Holding

roce
SWX:BEAN Return on Capital Employed July 11th 2023

In the above chart we have measured BELIMO Holding's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering BELIMO Holding here for free.

What Does the ROCE Trend For BELIMO Holding Tell Us?

The trends we've noticed at BELIMO Holding are quite reassuring. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 28%. The amount of capital employed has increased too, by 26%. So we're very much inspired by what we're seeing at BELIMO Holding thanks to its ability to profitably reinvest capital.

The Bottom Line

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what BELIMO Holding has. And a remarkable 128% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

On a separate note, we've found 1 warning sign for BELIMO Holding you'll probably want to know about.

BELIMO Holding is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

Valuation is complex, but we're here to simplify it.

Discover if BELIMO Holding might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.

About SWX:BEAN

BELIMO Holding

Develops, produces, distributes, and sells damper actuators, control valves, sensors, and meters for heating, ventilation, and air conditioning systems in Europe, the Middle East, Africa, the Americas, and the Asia Pacific.

Outstanding track record with excellent balance sheet.