The Returns At ANY Biztonsági Nyomda Nyrt (BUSE:ANY) Provide Us With Signs Of What's To Come

There are a few key trends to look for if we want to identify the next multi-bagger. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. In light of that, when we looked at ANY Biztonsági Nyomda Nyrt (BUSE:ANY) and its ROCE trend, we weren't exactly thrilled.

What is Return On Capital Employed (ROCE)?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for ANY Biztonsági Nyomda Nyrt:

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

0.095 = Ft1.4b ÷ (Ft22b - Ft8.0b) (Based on the trailing twelve months to September 2020).

So, ANY Biztonsági Nyomda Nyrt has an ROCE of 9.5%. On its own that's a low return on capital but it's in line with the industry's average returns of 10%.

Check out our latest analysis for ANY Biztonsági Nyomda Nyrt

In the above chart we have measured ANY Biztonsági Nyomda Nyrt's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free report for ANY Biztonsági Nyomda Nyrt.

So How Is ANY Biztonsági Nyomda Nyrt's ROCE Trending?

On the surface, the trend of ROCE at ANY Biztonsági Nyomda Nyrt doesn't inspire confidence. Around five years ago the returns on capital were 20%, but since then they've fallen to 9.5%. Given the business is employing more capital while revenue has slipped, this is a bit concerning. If this were to continue, you might be looking at a company that is trying to reinvest for growth but is actually losing market share since sales haven't increased.

The Bottom Line

From the above analysis, we find it rather worrisome that returns on capital and sales for ANY Biztonsági Nyomda Nyrt have fallen, meanwhile the business is employing more capital than it was five years ago. But investors must be expecting an improvement of sorts because over the last five yearsthe stock has delivered a respectable 67% return. Regardless, we don't feel too comfortable with the fundamentals so we'd be steering clear of this stock for now.

If you want to know some of the risks facing ANY Biztonsági Nyomda Nyrt we've found 4 warning signs (2 are concerning!) that you should be aware of before investing here.

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This article by Simply Wall St is general in nature. 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.
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