We Like Aspocomp Group Oyj's (HEL:ACG1V) Returns And Here's How They're Trending

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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. And in light of that, the trends we're seeing at Aspocomp Group Oyj's (HEL:ACG1V) look very promising so lets take a look.

Return On Capital Employed (ROCE): What Is It?

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. Analysts use this formula to calculate it for Aspocomp Group Oyj:

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

0.20 = €4.8m ÷ (€31m - €7.2m) (Based on the trailing twelve months to June 2022).

So, Aspocomp Group Oyj has an ROCE of 20%. In absolute terms that's a very respectable return and compared to the Electronic industry average of 17% it's pretty much on par.

See our latest analysis for Aspocomp Group Oyj

Above you can see how the current ROCE for Aspocomp Group Oyj compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Aspocomp Group Oyj here for free.

How Are Returns Trending?

Investors would be pleased with what's happening at Aspocomp Group Oyj. The data shows that returns on capital have increased substantially over the last five years to 20%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 95%. So we're very much inspired by what we're seeing at Aspocomp Group Oyj thanks to its ability to profitably reinvest capital.

The Bottom Line

All in all, it's terrific to see that Aspocomp Group Oyj is reaping the rewards from prior investments and is growing its capital base. And a remarkable 176% total return over the last five years tells us that investors are expecting more good things to come in the future. Therefore, we think it would be worth your time to check if these trends are going to continue.

If you want to continue researching Aspocomp Group Oyj, you might be interested to know about the 1 warning sign that our analysis has discovered.

High returns are a key ingredient to strong performance, so check out our free list ofstocks earning high returns on equity with solid balance sheets.

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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.