Stock Analysis

Returns At Intrakat Société Anonyme Technical and Energy Projects (ATH:INKAT) Are On The Way Up

ATSE:INKAT
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If you're looking for a multi-bagger, there's a few things to keep an eye out for. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Intrakat Société Anonyme Technical and Energy Projects' (ATH:INKAT) returns on capital, so let's have a look.

Return On Capital Employed (ROCE): What Is It?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Intrakat Société Anonyme Technical and Energy Projects is:

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

0.11 = €34m ÷ (€577m - €263m) (Based on the trailing twelve months to June 2023).

So, Intrakat Société Anonyme Technical and Energy Projects has an ROCE of 11%. That's a relatively normal return on capital, and it's around the 9.6% generated by the Construction industry.

Check out our latest analysis for Intrakat Société Anonyme Technical and Energy Projects

roce
ATSE:INKAT Return on Capital Employed November 3rd 2023

Historical performance is a great place to start when researching a stock so above you can see the gauge for Intrakat Société Anonyme Technical and Energy Projects' ROCE against it's prior returns. If you'd like to look at how Intrakat Société Anonyme Technical and Energy Projects has performed in the past in other metrics, you can view this free graph of past earnings, revenue and cash flow.

How Are Returns Trending?

We like the trends that we're seeing from Intrakat Société Anonyme Technical and Energy Projects. Over the last five years, returns on capital employed have risen substantially to 11%. The amount of capital employed has increased too, by 198%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.

One more thing to note, Intrakat Société Anonyme Technical and Energy Projects has decreased current liabilities to 46% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. Therefore we can rest assured that the growth in ROCE is a result of the business' fundamental improvements, rather than a cooking class featuring this company's books. However, current liabilities are still at a pretty high level, so just be aware that this can bring with it some risks.

In Conclusion...

To sum it up, Intrakat Société Anonyme Technical and Energy Projects has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Intrakat Société Anonyme Technical and Energy Projects can keep these trends up, it could have a bright future ahead.

If you want to continue researching Intrakat Société Anonyme Technical and Energy Projects, you might be interested to know about the 3 warning signs that our analysis has discovered.

While Intrakat Société Anonyme Technical and Energy Projects 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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Find out whether Intrakat Société Anonyme Technical and Energy Projects is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.