We Like These Underlying Return On Capital Trends At Bastide Le Confort Médical (EPA:BLC)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, 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. Speaking of which, we noticed some great changes in Bastide Le Confort Médical's (EPA:BLC) returns on capital, so let's have a look.

What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Bastide Le Confort Médical:

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

0.097 = €45m ÷ (€659m - €198m) (Based on the trailing twelve months to December 2023).

So, Bastide Le Confort Médical has an ROCE of 9.7%. On its own, that's a low figure but it's around the 8.5% average generated by the Healthcare industry.

Check out our latest analysis for Bastide Le Confort Médical

Above you can see how the current ROCE for Bastide Le Confort Médical compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Bastide Le Confort Médical .

What Does the ROCE Trend For Bastide Le Confort Médical Tell Us?

While in absolute terms it isn't a high ROCE, it's promising to see that it has been moving in the right direction. The data shows that returns on capital have increased substantially over the last five years to 9.7%. Basically the business is earning more per dollar of capital invested and in addition to that, 64% more capital is being employed now too. So we're very much inspired by what we're seeing at Bastide Le Confort Médical thanks to its ability to profitably reinvest capital.

What We Can Learn From Bastide Le Confort Médical's ROCE

In summary, it's great to see that Bastide Le Confort Médical can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. Given the stock has declined 50% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

On a final note, we found 4 warning signs for Bastide Le Confort Médical (1 can't be ignored) you should be aware of.

While Bastide Le Confort Médical isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.

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