Koncar - distributivni i specijalni transformatori d.d (ZGSE:KODT) Could Become A Multi-Bagger

To find a multi-bagger stock, what are the underlying trends we should look for in a business? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. And in light of that, the trends we're seeing at Koncar - distributivni i specijalni transformatori d.d's (ZGSE:KODT) look very promising so lets take a look.

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Return On Capital Employed (ROCE): What Is It?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Koncar - distributivni i specijalni transformatori d.d:

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

0.47 = €161m ÷ (€585m - €244m) (Based on the trailing twelve months to September 2025).

Thus, Koncar - distributivni i specijalni transformatori d.d has an ROCE of 47%. That's a fantastic return and not only that, it outpaces the average of 13% earned by companies in a similar industry.

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

Above you can see how the current ROCE for Koncar - distributivni i specijalni transformatori d.d 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 Koncar - distributivni i specijalni transformatori d.d .

What Does the ROCE Trend For Koncar - distributivni i specijalni transformatori d.d Tell Us?

The trends we've noticed at Koncar - distributivni i specijalni transformatori d.d are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 47%. The amount of capital employed has increased too, by 355%. So we're very much inspired by what we're seeing at Koncar - distributivni i specijalni transformatori d.d thanks to its ability to profitably reinvest capital.

On a separate but related note, it's important to know that Koncar - distributivni i specijalni transformatori d.d has a current liabilities to total assets ratio of 42%, which we'd consider pretty high. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

The Key Takeaway

All in all, it's terrific to see that Koncar - distributivni i specijalni transformatori d.d is reaping the rewards from prior investments and is growing its capital base. And a remarkable 2,342% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for KODT that compares the share price and estimated value.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity.

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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.