Koncar - distributivni i specijalni transformatori d.d (ZGSE:KODT) Has Some Way To Go To Become A Multi-Bagger

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'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base 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. That's why when we briefly looked at Koncar - distributivni i specijalni transformatori d.d's (ZGSE:KODT) ROCE trend, we were pretty happy with 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. The formula for this calculation on Koncar - distributivni i specijalni transformatori d.d is:

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

0.11 = Kn72m ÷ (Kn911m - Kn283m) (Based on the trailing twelve months to December 2020).

So, Koncar - distributivni i specijalni transformatori d.d has an ROCE of 11%. That's a relatively normal return on capital, and it's around the 10% generated by the Electrical industry.

View our latest analysis for Koncar - distributivni i specijalni transformatori d.d

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings, revenue and cash flow of Koncar - distributivni i specijalni transformatori d.d, check out these free graphs here.

How Are Returns Trending?

While the returns on capital are good, they haven't moved much. The company has consistently earned 11% for the last five years, and the capital employed within the business has risen 68% in that time. 11% is a pretty standard return, and it provides some comfort knowing that Koncar - distributivni i specijalni transformatori d.d 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.

What We Can Learn From Koncar - distributivni i specijalni transformatori d.d's ROCE

The main thing to remember is that Koncar - distributivni i specijalni transformatori d.d has proven its ability to continually reinvest at respectable rates of return. And the stock has done incredibly well with a 194% return over the last five years, so long term investors are no doubt ecstatic with that result. So even though the stock might be more "expensive" than it was before, we think the strong fundamentals warrant this stock for further research.

Koncar - distributivni i specijalni transformatori d.d does have some risks though, and we've spotted 2 warning signs for Koncar - distributivni i specijalni transformatori d.d that you might be interested in.

While Koncar - distributivni i specijalni transformatori 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.

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