Returns At Société Française de Casinos Société Anonyme (EPA:SFCA) Are On The Way Up

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So on that note, Société Française de Casinos Société Anonyme (EPA:SFCA) looks quite promising in regards to its trends of return on capital.

What Is Return On Capital Employed (ROCE)?

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. To calculate this metric for Société Française de Casinos Société Anonyme, this is the formula:

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

0.10 = €1.6m ÷ (€21m - €5.4m) (Based on the trailing twelve months to October 2023).

So, Société Française de Casinos Société Anonyme has an ROCE of 10%. On its own, that's a standard return, however it's much better than the 7.8% generated by the Hospitality industry.

Check out our latest analysis for Société Française de Casinos Société Anonyme

Historical performance is a great place to start when researching a stock so above you can see the gauge for Société Française de Casinos Société Anonyme'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 Française de Casinos Société Anonyme.

What Does the ROCE Trend For Société Française de Casinos Société Anonyme Tell Us?

You'd find it hard not to be impressed with the ROCE trend at Société Française de Casinos Société Anonyme. We found that the returns on capital employed over the last five years have risen by 237%. That's a very favorable trend because this means that the company is earning more per dollar of capital that's being employed. Interestingly, the business may be becoming more efficient because it's applying 37% less capital than it was five years ago. Société Française de Casinos Société Anonyme may be selling some assets so it's worth investigating if the business has plans for future investments to increase returns further still.

In Conclusion...

In a nutshell, we're pleased to see that Société Française de Casinos Société Anonyme has been able to generate higher returns from less capital. Since the total return from the stock has been almost flat over the last five years, there might be an opportunity here if the valuation looks good. So researching this company further and determining whether or not these trends will continue seems justified.

On a separate note, we've found 1 warning sign for Société Française de Casinos Société Anonyme you'll probably want to know about.

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.