Returns Are Gaining Momentum At Coral India Finance and Housing (NSE:CORALFINAC)

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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. With that in mind, we've noticed some promising trends at Coral India Finance and Housing (NSE:CORALFINAC) so let's look a bit deeper.

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

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. The formula for this calculation on Coral India Finance and Housing is:

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

0.14 = ₹244m ÷ (₹1.8b - ₹27m) (Based on the trailing twelve months to December 2023).

So, Coral India Finance and Housing has an ROCE of 14%. That's a pretty standard return and it's in line with the industry average of 14%.

Check out our latest analysis for Coral India Finance and Housing

Historical performance is a great place to start when researching a stock so above you can see the gauge for Coral India Finance and Housing's ROCE against it's prior returns. If you're interested in investigating Coral India Finance and Housing's past further, check out this free graph covering Coral India Finance and Housing's past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

Investors would be pleased with what's happening at Coral India Finance and Housing. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 14%. The amount of capital employed has increased too, by 36%. So we're very much inspired by what we're seeing at Coral India Finance and Housing thanks to its ability to profitably reinvest capital.

The Key Takeaway

To sum it up, Coral India Finance and Housing has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And a remarkable 153% 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 Coral India Finance and Housing can keep these trends up, it could have a bright future ahead.

One more thing: We've identified 4 warning signs with Coral India Finance and Housing (at least 1 which shouldn't be ignored) , and understanding these would certainly be useful.

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.

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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.