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

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. So on that note, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco (EPA:BAIN) looks quite promising in regards to its trends of return on capital.

What Is Return On Capital Employed (ROCE)?

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 = €73m ÷ (€2.1b - €323m) (Based on the trailing twelve months to March 2024).

Thus, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has an ROCE of 4.1%. In absolute terms, that's a low return and it also under-performs the Hospitality industry average of 8.1%.

Check out 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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco.

The Trend Of ROCE

Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has recently broken into profitability so their prior investments seem to be paying off. About five years ago the company was generating losses but things have turned around because it's now earning 4.1% on its capital. Not only that, but the company is utilizing 60% more capital than before, but that's to be expected from a company trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

In Conclusion...

Overall, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco 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 100% 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.

On a final note, we've found 1 warning sign for Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco that we think you should be aware of.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.