Capital Allocation Trends At Atrys Health (BME:ATRY) Aren't Ideal

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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. In light of that, when we looked at Atrys Health (BME:ATRY) and its ROCE trend, we weren't exactly thrilled.

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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 Atrys Health:

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

0.0091 = €4.3m ÷ (€579m - €111m) (Based on the trailing twelve months to June 2025).

So, Atrys Health has an ROCE of 0.9%. In absolute terms, that's a low return and it also under-performs the Healthcare industry average of 8.7%.

View our latest analysis for Atrys Health

Above you can see how the current ROCE for Atrys Health 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 Atrys Health .

The Trend Of ROCE

On the surface, the trend of ROCE at Atrys Health doesn't inspire confidence. Around five years ago the returns on capital were 2.1%, but since then they've fallen to 0.9%. However it looks like Atrys Health might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.

Our Take On Atrys Health's ROCE

To conclude, we've found that Atrys Health is reinvesting in the business, but returns have been falling. And in the last five years, the stock has given away 67% so the market doesn't look too hopeful on these trends strengthening any time soon. Therefore based on the analysis done in this article, we don't think Atrys Health has the makings of a multi-bagger.

On a separate note, we've found 1 warning sign for Atrys Health you'll probably want to know about.

While Atrys Health 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.