Returns Are Gaining Momentum At Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM)

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. With that in mind, we've noticed some promising trends at Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) so let's look a bit deeper.

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. The formula for this calculation on Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság is:

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

0.13 = Ft148b ÷ (Ft1.5t - Ft347b) (Based on the trailing twelve months to December 2023).

Thus, Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has an ROCE of 13%. In absolute terms, that's a satisfactory return, but compared to the Telecom industry average of 11% it's much better.

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'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság .

How Are Returns Trending?

The trends we've noticed at Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 13%. 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 Key Takeaway

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 154% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság can keep these trends up, it could have a bright future ahead.

If you want to continue researching Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság, you might be interested to know about the 1 warning sign that our analysis has discovered.

While Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság 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.