Under The Bonnet, Organization of Football Prognostics' (ATH:OPAP) Returns Look Impressive

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. And in light of that, the trends we're seeing at Organization of Football Prognostics' (ATH:OPAP) look very promising so lets take a look.

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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. Analysts use this formula to calculate it for Organization of Football Prognostics:

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

0.49 = €697m ÷ (€2.0b - €572m) (Based on the trailing twelve months to December 2024).

Thus, Organization of Football Prognostics has an ROCE of 49%. In absolute terms that's a great return and it's even better than the Hospitality industry average of 13%.

See our latest analysis for Organization of Football Prognostics

Above you can see how the current ROCE for Organization of Football Prognostics 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 Organization of Football Prognostics .

How Are Returns Trending?

We're pretty happy with how the ROCE has been trending at Organization of Football Prognostics. The figures show that over the last five years, returns on capital have grown by 223%. That's not bad because this tells for every dollar invested (capital employed), the company is increasing the amount earned from that dollar. In regards to capital employed, Organization of Football Prognostics appears to been achieving more with less, since the business is using 25% less capital to run its operation. Organization of Football Prognostics may be selling some assets so it's worth investigating if the business has plans for future investments to increase returns further still.

For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. Essentially the business now has suppliers or short-term creditors funding about 29% of its operations, which isn't ideal. It's worth keeping an eye on this because as the percentage of current liabilities to total assets increases, some aspects of risk also increase.

In Conclusion...

In a nutshell, we're pleased to see that Organization of Football Prognostics has been able to generate higher returns from less capital. Since the stock has returned a staggering 286% to shareholders over the last five years, it looks like investors are recognizing these changes. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

On a separate note, we've found 1 warning sign for Organization of Football Prognostics you'll probably want to know about.

If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets 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.