The Trends At Budweiser Brewing Company APAC (HKG:1876) That You Should Know About

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. However, after investigating Budweiser Brewing Company APAC (HKG:1876), we don't think it's current trends fit the mold of a multi-bagger.

Understanding 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 Budweiser Brewing Company APAC:

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

0.077 = US$891m ÷ (US$16b - US$4.6b) (Based on the trailing twelve months to December 2020).

Thus, Budweiser Brewing Company APAC has an ROCE of 7.7%. On its own, that's a low figure but it's around the 8.5% average generated by the Beverage industry.

Check out our latest analysis for Budweiser Brewing Company APAC

In the above chart we have measured Budweiser Brewing Company APAC'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 Budweiser Brewing Company APAC here for free.

How Are Returns Trending?

Over the past three years, Budweiser Brewing Company APAC's ROCE and capital employed have both remained mostly flat. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So don't be surprised if Budweiser Brewing Company APAC doesn't end up being a multi-bagger in a few years time.

The Bottom Line On Budweiser Brewing Company APAC's ROCE

In summary, Budweiser Brewing Company APAC isn't compounding its earnings but is generating stable returns on the same amount of capital employed. Since the stock has gained an impressive 17% over the last year, investors must think there's better things to come. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high.

One more thing, we've spotted 1 warning sign facing Budweiser Brewing Company APAC that you might find interesting.

While Budweiser Brewing Company APAC 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. 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.
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