ENENSYS Technologies (EPA:ALNN6) Is Experiencing Growth In Returns On Capital

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. 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. With that in mind, we've noticed some promising trends at ENENSYS Technologies (EPA:ALNN6) so let's look a bit deeper.

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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 ENENSYS Technologies is:

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

0.052 = €514k ÷ (€15m - €5.3m) (Based on the trailing twelve months to June 2025).

So, ENENSYS Technologies has an ROCE of 5.2%. Ultimately, that's a low return and it under-performs the Communications industry average of 10%.

View our latest analysis for ENENSYS Technologies

Above you can see how the current ROCE for ENENSYS Technologies compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for ENENSYS Technologies .

What Does the ROCE Trend For ENENSYS Technologies Tell Us?

Like most people, we're pleased that ENENSYS Technologies is now generating some pretax earnings. Historically the company was generating losses but as we can see from the latest figures referenced above, they're now earning 5.2% on their capital employed. Additionally, the business is utilizing 27% less capital than it was five years ago, and taken at face value, that can mean the company needs less funds at work to get a return. ENENSYS Technologies could be selling under-performing assets since the ROCE is improving.

The Bottom Line

From what we've seen above, ENENSYS Technologies has managed to increase it's returns on capital all the while reducing it's capital base. And since the stock has fallen 12% over the last five years, there might be an opportunity here. With that in mind, we believe the promising trends warrant this stock for further investigation.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 2 warning signs for ENENSYS Technologies (of which 1 is potentially serious!) that you should know about.

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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.