Losinjska Plovidba Holding d.d (ZGSE:LPLH) Is Doing The Right Things To Multiply Its Share Price

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. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount 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. Speaking of which, we noticed some great changes in Losinjska Plovidba Holding d.d's (ZGSE:LPLH) returns on capital, so let's have a look.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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 Losinjska Plovidba Holding d.d:

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

0.035 = €1.0m ÷ (€35m - €5.1m) (Based on the trailing twelve months to December 2024).

So, Losinjska Plovidba Holding d.d has an ROCE of 3.5%. In absolute terms, that's a low return and it also under-performs the Shipping industry average of 8.0%.

View our latest analysis for Losinjska Plovidba Holding d.d

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

How Are Returns Trending?

We're delighted to see that Losinjska Plovidba Holding d.d is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses five years ago, but now it's earning 3.5% which is a sight for sore eyes. Not only that, but the company is utilizing 29% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

Our Take On Losinjska Plovidba Holding d.d's ROCE

In summary, it's great to see that Losinjska Plovidba Holding d.d has managed to break into profitability and is continuing to reinvest in its business. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Losinjska Plovidba Holding d.d can keep these trends up, it could have a bright future ahead.

Losinjska Plovidba Holding d.d does come with some risks though, we found 4 warning signs in our investment analysis, and 1 of those is a bit unpleasant...

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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.