EL. D. Mouzakis (ATH:MOYZK) Shareholders Will Want The ROCE Trajectory To Continue

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at EL. D. Mouzakis (ATH:MOYZK) so let's look a bit deeper.

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

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. Analysts use this formula to calculate it for EL. D. Mouzakis:

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

0.014 = €798k ÷ (€58m - €1.6m) (Based on the trailing twelve months to June 2024).

Thus, EL. D. Mouzakis has an ROCE of 1.4%. In absolute terms, that's a low return and it also under-performs the Luxury industry average of 9.6%.

View our latest analysis for EL. D. Mouzakis

Historical performance is a great place to start when researching a stock so above you can see the gauge for EL. D. Mouzakis' ROCE against it's prior returns. If you're interested in investigating EL. D. Mouzakis' past further, check out this free graph covering EL. D. Mouzakis' past earnings, revenue and cash flow .

What Can We Tell From EL. D. Mouzakis' ROCE Trend?

While the ROCE isn't as high as some other companies out there, it's great to see it's on the up. The figures show that over the last five years, ROCE has grown 31% whilst employing roughly the same amount of capital. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

What We Can Learn From EL. D. Mouzakis' ROCE

In summary, we're delighted to see that EL. D. Mouzakis has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And with a respectable 71% 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. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

One more thing to note, we've identified 3 warning signs with EL. D. Mouzakis and understanding them should be part of your investment process.

While EL. D. Mouzakis 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.

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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.