The Return Trends At Naturgy Chile Gas Natural (SNSE:NTGCLGAS) Look Promising

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at Naturgy Chile Gas Natural (SNSE:NTGCLGAS) and its trend of ROCE, we really liked what we saw.

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

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. To calculate this metric for Naturgy Chile Gas Natural, this is the formula:

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

0.18 = CL$449b ÷ (CL$2.7t - CL$251b) (Based on the trailing twelve months to March 2025).

Thus, Naturgy Chile Gas Natural has an ROCE of 18%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Gas Utilities industry average of 21%.

See our latest analysis for Naturgy Chile Gas Natural

Historical performance is a great place to start when researching a stock so above you can see the gauge for Naturgy Chile Gas Natural's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Naturgy Chile Gas Natural.

So How Is Naturgy Chile Gas Natural's ROCE Trending?

The trends we've noticed at Naturgy Chile Gas Natural are quite reassuring. Over the last five years, returns on capital employed have risen substantially to 18%. Basically the business is earning more per dollar of capital invested and in addition to that, 29% more capital is being employed now too. So we're very much inspired by what we're seeing at Naturgy Chile Gas Natural thanks to its ability to profitably reinvest capital.

What We Can Learn From Naturgy Chile Gas Natural's ROCE

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 Naturgy Chile Gas Natural has. Since the stock has returned a staggering 388% 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 Naturgy Chile Gas Natural can keep these trends up, it could have a bright future ahead.

If you'd like to know about the risks facing Naturgy Chile Gas Natural, we've discovered 1 warning sign that you should be aware of.

While Naturgy Chile Gas Natural 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.