Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) Is Experiencing Growth In Returns On Capital

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) and its trend of ROCE, we really liked what we saw.

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

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 Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság, this is the formula:

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

0.19 = Ft244b ÷ (Ft1.5t - Ft235b) (Based on the trailing twelve months to March 2025).

So, Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has an ROCE of 19%. On its own, that's a standard return, however it's much better than the 11% generated by the Telecom industry.

See our latest analysis for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság

Above you can see how the current ROCE for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság .

What Does the ROCE Trend For Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság Tell Us?

Investors would be pleased with what's happening at Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 19%. The amount of capital employed has increased too, by 37%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

The Bottom Line

To sum it up, Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And a remarkable 516% total return over the last five years tells us that investors are expecting more good things to come in the future. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

On a separate note, we've found 1 warning sign for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság you'll probably want to know about.

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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.