The Returns At Mineralbrunnen Überkingen-Teinach GmbH KGaA (FRA:MUT) Aren't Growing

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. However, after briefly looking over the numbers, we don't think Mineralbrunnen Überkingen-Teinach GmbH KGaA (FRA:MUT) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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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. To calculate this metric for Mineralbrunnen Überkingen-Teinach GmbH KGaA, this is the formula:

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

0.091 = €11m ÷ (€147m - €30m) (Based on the trailing twelve months to June 2025).

Therefore, Mineralbrunnen Überkingen-Teinach GmbH KGaA has an ROCE of 9.1%. On its own, that's a low figure but it's around the 7.9% average generated by the Beverage industry.

Check out our latest analysis for Mineralbrunnen Überkingen-Teinach GmbH KGaA

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating Mineralbrunnen Überkingen-Teinach GmbH KGaA's past further, check out this free graph covering Mineralbrunnen Überkingen-Teinach GmbH KGaA's past earnings, revenue and cash flow.

How Are Returns Trending?

Things have been pretty stable at Mineralbrunnen Überkingen-Teinach GmbH KGaA, with its capital employed and returns on that capital staying somewhat the same for the last five years. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So don't be surprised if Mineralbrunnen Überkingen-Teinach GmbH KGaA doesn't end up being a multi-bagger in a few years time.

On another note, while the change in ROCE trend might not scream for attention, it's interesting that the current liabilities have actually gone up over the last five years. This is intriguing because if current liabilities hadn't increased to 20% of total assets, this reported ROCE would probably be less than9.1% because total capital employed would be higher.The 9.1% ROCE could be even lower if current liabilities weren't 20% of total assets, because the the formula would show a larger base of total capital employed. With that in mind, just be wary if this ratio increases in the future, because if it gets particularly high, this brings with it some new elements of risk.

The Bottom Line

We can conclude that in regards to Mineralbrunnen Überkingen-Teinach GmbH KGaA's returns on capital employed and the trends, there isn't much change to report on. Although the market must be expecting these trends to improve because the stock has gained 42% over the last five years. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high.

On a separate note, we've found 2 warning signs for Mineralbrunnen Überkingen-Teinach GmbH KGaA you'll probably want to know about.

While Mineralbrunnen Überkingen-Teinach GmbH KGaA 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.