Returns On Capital Are Showing Encouraging Signs At Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco (EPA:BAIN)

If you're looking for a multi-bagger, there's a few things to keep an eye out for. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing 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. With that in mind, we've noticed some promising trends at Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco (EPA:BAIN) so let's look a bit deeper.

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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 Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco:

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

0.041 = €75m ÷ (€2.2b - €350m) (Based on the trailing twelve months to March 2025).

Therefore, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has an ROCE of 4.1%. Ultimately, that's a low return and it under-performs the Hospitality industry average of 8.5%.

View our latest analysis for Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco

Historical performance is a great place to start when researching a stock so above you can see the gauge for Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's ROCE against it's prior returns. If you'd like to look at how Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has performed in the past in other metrics, you can view this free graph of Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's past earnings, revenue and cash flow.

What Does the ROCE Trend For Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco Tell Us?

We're glad to see that ROCE is heading in the right direction, even if it is still low at the moment. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 4.1%. Basically the business is earning more per dollar of capital invested and in addition to that, 68% more capital is being employed now too. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

Our Take On Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's ROCE

To sum it up, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 77% return over the last five years. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for BAIN that compares the share price and estimated value.

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.