Capital Investment Trends At Motor Oil (Hellas) Corinth Refineries (ATH:MOH) Look Strong

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Ergo, when we looked at the ROCE trends at Motor Oil (Hellas) Corinth Refineries (ATH:MOH), we liked what we saw.

What Is Return On Capital Employed (ROCE)?

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 Motor Oil (Hellas) Corinth Refineries:

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

0.21 = €1.2b ÷ (€7.7b - €1.8b) (Based on the trailing twelve months to June 2024).

Therefore, Motor Oil (Hellas) Corinth Refineries has an ROCE of 21%. In absolute terms that's a great return and it's even better than the Oil and Gas industry average of 10%.

View our latest analysis for Motor Oil (Hellas) Corinth Refineries

Above you can see how the current ROCE for Motor Oil (Hellas) Corinth Refineries compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Motor Oil (Hellas) Corinth Refineries for free.

What The Trend Of ROCE Can Tell Us

We'd be pretty happy with returns on capital like Motor Oil (Hellas) Corinth Refineries. The company has employed 166% more capital in the last five years, and the returns on that capital have remained stable at 21%. Now considering ROCE is an attractive 21%, this combination is actually pretty appealing because it means the business can consistently put money to work and generate these high returns. If these trends can continue, it wouldn't surprise us if the company became a multi-bagger.

What We Can Learn From Motor Oil (Hellas) Corinth Refineries' ROCE

In the end, the company has proven it can reinvest it's capital at high rates of returns, which you'll remember is a trait of a multi-bagger. In light of this, the stock has only gained 19% over the last five years for shareholders who have owned the stock in this period. So because of the trends we're seeing, we'd recommend looking further into this stock to see if it has the makings of a multi-bagger.

If you'd like to know more about Motor Oil (Hellas) Corinth Refineries, we've spotted 3 warning signs, and 1 of them is potentially serious.

Motor Oil (Hellas) Corinth Refineries is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.