The Trend Of High Returns At VERBIO Vereinigte BioEnergie (ETR:VBK) Has Us Very Interested

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, the ROCE of VERBIO Vereinigte BioEnergie (ETR:VBK) looks great, so lets see what the trend can tell us.

What Is Return On Capital Employed (ROCE)?

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 VERBIO Vereinigte BioEnergie, this is the formula:

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

0.44 = €345m ÷ (€999m - €211m) (Based on the trailing twelve months to March 2022).

Thus, VERBIO Vereinigte BioEnergie has an ROCE of 44%. That's a fantastic return and not only that, it outpaces the average of 16% earned by companies in a similar industry.

Check out our latest analysis for VERBIO Vereinigte BioEnergie

Above you can see how the current ROCE for VERBIO Vereinigte BioEnergie 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 report for VERBIO Vereinigte BioEnergie.

The Trend Of ROCE

VERBIO Vereinigte BioEnergie is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 44%. Basically the business is earning more per dollar of capital invested and in addition to that, 163% more capital is being employed now too. So we're very much inspired by what we're seeing at VERBIO Vereinigte BioEnergie thanks to its ability to profitably reinvest capital.

Our Take On VERBIO Vereinigte BioEnergie's ROCE

All in all, it's terrific to see that VERBIO Vereinigte BioEnergie is reaping the rewards from prior investments and is growing its capital base. Since the stock has returned a staggering 581% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue.

VERBIO Vereinigte BioEnergie does have some risks though, and we've spotted 3 warning signs for VERBIO Vereinigte BioEnergie that you might be interested in.

VERBIO Vereinigte BioEnergie 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.

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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.