Dantax (CPH:DANT) Is Experiencing Growth In Returns On Capital

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at Dantax (CPH:DANT) 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. Analysts use this formula to calculate it for Dantax:

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

0.0061 = kr.456k ÷ (kr.83m - kr.8.8m) (Based on the trailing twelve months to September 2025).

Thus, Dantax has an ROCE of 0.6%. Ultimately, that's a low return and it under-performs the Consumer Durables industry average of 8.5%.

Check out our latest analysis for Dantax

Historical performance is a great place to start when researching a stock so above you can see the gauge for Dantax's ROCE against it's prior returns. If you'd like to look at how Dantax has performed in the past in other metrics, you can view this free graph of Dantax's past earnings, revenue and cash flow.

How Are Returns Trending?

We're delighted to see that Dantax is reaping rewards from its investments and has now broken into profitability. The company now earns 0.6% on its capital, because five years ago it was incurring losses. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward. After all, a company can only become a long term multi-bagger if it continually reinvests in itself at high rates of return.

The Bottom Line

To sum it up, Dantax is collecting higher returns from the same amount of capital, and that's impressive. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue.

One more thing: We've identified 6 warning signs with Dantax (at least 4 which shouldn't be ignored) , and understanding these would certainly be useful.

While Dantax 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.