The Return Trends At Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco (EPA:BAIN) Look Promising

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's 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. Speaking of which, we noticed some great changes in Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's (EPA:BAIN) returns on capital, so let's have a look.

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. The formula for this calculation on Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco is:

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

0.039 = €37m ÷ (€1.3b - €360m) (Based on the trailing twelve months to March 2022).

Therefore, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has an ROCE of 3.9%. On its own, that's a low figure but it's around the 4.6% average generated by the Hospitality industry.

Check out the opportunities and risks within the FR Hospitality industry.

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's past further, check out this free graph of past earnings, revenue and cash flow.

So How Is Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's ROCE Trending?

We're delighted to see that Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco is reaping rewards from its investments and has now broken into profitability. The company was generating losses five years ago, but has managed to turn it around and as we saw earlier is now earning 3.9%, which is always encouraging. On top of that, what's interesting is that the amount of capital being employed has remained steady, so the business hasn't needed to put any additional money to work to generate these higher returns. With no noticeable increase in capital employed, it's worth knowing what the company plans on doing going forward in regards to reinvesting and growing the business. Because in the end, a business can only get so efficient.

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

To bring it all together, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has done well to increase the returns it's generating from its capital employed. Since the stock has returned a staggering 114% to shareholders over the last five years, it looks like investors are recognizing these changes. 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.

While Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco looks impressive, no company is worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BAIN is currently trading for a fair price.

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.