Ðuro Ðakovic Grupa d.d's (ZGSE:DDJH) Returns On Capital Are Heading Higher

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. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Ðuro Ðakovic Grupa d.d (ZGSE:DDJH) looks quite promising in regards to its trends of return on capital.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

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. The formula for this calculation on Ðuro Ðakovic Grupa d.d is:

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

0.015 = €1.2m ÷ (€136m - €57m) (Based on the trailing twelve months to June 2025).

Thus, Ðuro Ðakovic Grupa d.d has an ROCE of 1.5%. Ultimately, that's a low return and it under-performs the Machinery industry average of 11%.

See our latest analysis for Ðuro Ðakovic Grupa d.d

Historical performance is a great place to start when researching a stock so above you can see the gauge for Ðuro Ðakovic Grupa d.d's ROCE against it's prior returns. If you'd like to look at how Ðuro Ðakovic Grupa d.d has performed in the past in other metrics, you can view this free graph of Ðuro Ðakovic Grupa d.d's past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

Ðuro Ðakovic Grupa d.d has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 1.5% which is a sight for sore eyes. In addition to that, Ðuro Ðakovic Grupa d.d is employing 233% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 42%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. Therefore we can rest assured that the growth in ROCE is a result of the business' fundamental improvements, rather than a cooking class featuring this company's books. Nevertheless, there are some potential risks the company is bearing with current liabilities that high, so just keep that in mind.

Our Take On Ðuro Ðakovic Grupa d.d's ROCE

To the delight of most shareholders, Ðuro Ðakovic Grupa d.d has now broken into profitability. Considering the stock has delivered 19% to its stockholders over the last five years, it may be fair to think that investors aren't fully aware of the promising trends yet. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

Like most companies, Ðuro Ðakovic Grupa d.d does come with some risks, and we've found 2 warning signs that you should be aware of.

While Ðuro Ðakovic Grupa d.d isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.