Stock Analysis

Returns At Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien (ETR:BVB) Are On The Way Up

XTRA:BVB
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If we want to find a stock that could multiply over the long term, what are the underlying trends we should look 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. So on that note, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien (ETR:BVB) looks quite promising in regards to its trends of return on capital.

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 Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien, this is the formula:

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

0.094 = €40m ÷ (€614m - €192m) (Based on the trailing twelve months to December 2023).

So, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien has an ROCE of 9.4%. In absolute terms, that's a low return and it also under-performs the Entertainment industry average of 17%.

View our latest analysis for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien

roce
XTRA:BVB Return on Capital Employed May 9th 2024

In the above chart we have measured Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien .

What Can We Tell From Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's ROCE Trend?

Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien has not disappointed with their ROCE growth. More specifically, while the company has kept capital employed relatively flat over the last five years, the ROCE has climbed 29% in that same time. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

The Bottom Line On Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's ROCE

To bring it all together, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien has done well to increase the returns it's generating from its capital employed. Astute investors may have an opportunity here because the stock has declined 49% in the last five years. So researching this company further and determining whether or not these trends will continue seems justified.

One more thing to note, we've identified 2 warning signs with Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien and understanding these should be part of your investment process.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

Valuation is complex, but we're helping make it simple.

Find out whether Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.