The Return Trends At MITCON Consultancy & Engineering Services (NSE:MITCON) Look Promising

If you're looking for a multi-bagger, there's a few things to 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 MITCON Consultancy & Engineering Services' (NSE:MITCON) returns on capital, so let's have a look.

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 MITCON Consultancy & Engineering Services, this is the formula:

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

0.068 = ₹146m ÷ (₹2.5b - ₹321m) (Based on the trailing twelve months to June 2023).

So, MITCON Consultancy & Engineering Services has an ROCE of 6.8%. In absolute terms, that's a low return and it also under-performs the Professional Services industry average of 14%.

View our latest analysis for MITCON Consultancy & Engineering Services

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

What Does the ROCE Trend For MITCON Consultancy & Engineering Services Tell Us?

We're glad to see that ROCE is heading in the right direction, even if it is still low at the moment. Over the last five years, returns on capital employed have risen substantially to 6.8%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 139%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

The Bottom Line On MITCON Consultancy & Engineering Services' ROCE

All in all, it's terrific to see that MITCON Consultancy & Engineering Services is reaping the rewards from prior investments and is growing its capital base. And with a respectable 79% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. Therefore, we think it would be worth your time to check if these trends are going to continue.

On a final note, we found 2 warning signs for MITCON Consultancy & Engineering Services (1 makes us a bit uncomfortable) you should be aware of.

While MITCON Consultancy & Engineering Services 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.