INA-Industrija nafte d.d's (ZGSE:INA) Returns On Capital Are Heading Higher

There are a few key trends to look for if we want to identify the next 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. So when we looked at INA-Industrija nafte d.d (ZGSE:INA) and its trend of ROCE, we really liked what we saw.

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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. To calculate this metric for INA-Industrija nafte d.d, this is the formula:

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

0.099 = €233m ÷ (€3.6b - €1.2b) (Based on the trailing twelve months to June 2025).

Therefore, INA-Industrija nafte d.d has an ROCE of 9.9%. Even though it's in line with the industry average of 9.7%, it's still a low return by itself.

See our latest analysis for INA-Industrija nafte d.d

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

How Are Returns Trending?

The fact that INA-Industrija nafte d.d is now generating some pre-tax profits from its prior investments is very encouraging. About five years ago the company was generating losses but things have turned around because it's now earning 9.9% on its capital. In addition to that, INA-Industrija nafte d.d is employing 25% 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.

Our Take On INA-Industrija nafte d.d's ROCE

In summary, it's great to see that INA-Industrija nafte d.d has managed to break into profitability and is continuing to reinvest in its business. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 41% return over the last five years. Therefore, we think it would be worth your time to check if these trends are going to continue.

INA-Industrija nafte d.d does come with some risks though, we found 2 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

While INA-Industrija nafte d.d 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. 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.