The Return Trends At Nurminen Logistics Oyj (HEL:NLG1V) Look Promising

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. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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 on that note, Nurminen Logistics Oyj (HEL:NLG1V) looks quite promising in regards to its trends of return on capital.

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

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Nurminen Logistics Oyj is:

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

0.16 = €9.7m ÷ (€82m - €21m) (Based on the trailing twelve months to December 2021).

Therefore, Nurminen Logistics Oyj has an ROCE of 16%. In absolute terms, that's a satisfactory return, but compared to the Logistics industry average of 13% it's much better.

View our latest analysis for Nurminen Logistics Oyj

In the above chart we have measured Nurminen Logistics Oyj's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Nurminen Logistics Oyj here for free.

What Does the ROCE Trend For Nurminen Logistics Oyj Tell Us?

Nurminen Logistics Oyj has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 16% which is a sight for sore eyes. In addition to that, Nurminen Logistics Oyj is employing 105% more capital than previously which is expected of a company that's trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

Our Take On Nurminen Logistics Oyj's ROCE

Overall, Nurminen Logistics Oyj gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. And with a respectable 44% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

If you want to know some of the risks facing Nurminen Logistics Oyj we've found 3 warning signs (1 is potentially serious!) that you should be aware of before investing here.

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.

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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.