Motor Oil (Hellas) Corinth Refineries (ATH:MOH) Has More To Do To Multiply In Value Going Forward

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. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount 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, the ROCE of Motor Oil (Hellas) Corinth Refineries (ATH:MOH) looks decent, right now, so lets see what the trend of returns can tell us.

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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. To calculate this metric for Motor Oil (Hellas) Corinth Refineries, this is the formula:

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

0.12 = €706m ÷ (€7.3b - €1.5b) (Based on the trailing twelve months to December 2024).

So, Motor Oil (Hellas) Corinth Refineries has an ROCE of 12%. On its own, that's a standard return, however it's much better than the 9.8% generated by the Oil and Gas industry.

See 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 to see what analysts are forecasting going forward, you should check out our free analyst report for Motor Oil (Hellas) Corinth Refineries .

What Can We Tell From Motor Oil (Hellas) Corinth Refineries' ROCE Trend?

While the returns on capital are good, they haven't moved much. The company has consistently earned 12% for the last five years, and the capital employed within the business has risen 149% in that time. 12% is a pretty standard return, and it provides some comfort knowing that Motor Oil (Hellas) Corinth Refineries has consistently earned this amount. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.

One more thing to note, even though ROCE has remained relatively flat over the last five years, the reduction in current liabilities to 21% of total assets, is good to see from a business owner's perspective. This can eliminate some of the risks inherent in the operations because the business has less outstanding obligations to their suppliers and or short-term creditors than they did previously.

The Bottom Line

To sum it up, Motor Oil (Hellas) Corinth Refineries has simply been reinvesting capital steadily, at those decent rates of return. And the stock has done incredibly well with a 110% return over the last five years, so long term investors are no doubt ecstatic with that result. So while the positive underlying trends may be accounted for by investors, we still think this stock is worth looking into further.

Motor Oil (Hellas) Corinth Refineries does come with some risks though, we found 4 warning signs in our investment analysis, and 2 of those are a bit concerning...

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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.