The 21% Return On Capital At Kri-Kri Milk Industry (ATH:KRI) Got Our Attention

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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. So when we looked at the ROCE trend of Kri-Kri Milk Industry (ATH:KRI) we really liked what we saw.

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 Kri-Kri Milk Industry:

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

0.21 = €19m ÷ (€113m - €24m) (Based on the trailing twelve months to September 2020).

Thus, Kri-Kri Milk Industry has an ROCE of 21%. In absolute terms that's a great return and it's even better than the Food industry average of 8.2%.

View our latest analysis for Kri-Kri Milk Industry

In the above chart we have measured Kri-Kri Milk Industry's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Kri-Kri Milk Industry here for free.

How Are Returns Trending?

Investors would be pleased with what's happening at Kri-Kri Milk Industry. Over the last five years, returns on capital employed have risen substantially to 21%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 55%. 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.

Our Take On Kri-Kri Milk Industry's ROCE

All in all, it's terrific to see that Kri-Kri Milk Industry is reaping the rewards from prior investments and is growing its capital base. 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 Kri-Kri Milk Industry can keep these trends up, it could have a bright future ahead.

On a separate note, we've found 2 warning signs for Kri-Kri Milk Industry you'll probably want to know about.

Kri-Kri Milk Industry 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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