We Like These Underlying Return On Capital Trends At Scandinavian Astor Group (FRA:Y73)

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. With that in mind, we've noticed some promising trends at Scandinavian Astor Group (FRA:Y73) so let's look a bit deeper.

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

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Scandinavian Astor Group:

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

0.013 = kr11m ÷ (kr999m - kr136m) (Based on the trailing twelve months to June 2025).

Therefore, Scandinavian Astor Group has an ROCE of 1.3%. Ultimately, that's a low return and it under-performs the Aerospace & Defense industry average of 14%.

See our latest analysis for Scandinavian Astor Group

Above you can see how the current ROCE for Scandinavian Astor Group compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Scandinavian Astor Group .

So How Is Scandinavian Astor Group's ROCE Trending?

We're delighted to see that Scandinavian Astor Group is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making one year ago but is is now generating 1.3% on its capital. And unsurprisingly, like most companies trying to break into the black, Scandinavian Astor Group is utilizing 278% more capital than it was one year ago. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

On a related note, the company's ratio of current liabilities to total assets has decreased to 14%, which basically reduces it's funding from the likes of short-term creditors or suppliers. So shareholders would be pleased that the growth in returns has mostly come from underlying business performance.

The Key Takeaway

In summary, it's great to see that Scandinavian Astor Group has managed to break into profitability and is continuing to reinvest in its business. And a remarkable 125% total return over the last year 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.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for Scandinavian Astor Group (of which 2 shouldn't be ignored!) that you should know about.

While Scandinavian Astor Group may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.