We Think All E Technologies (NSE:ALLETEC) Might Have The DNA Of A Multi-Bagger

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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Speaking of which, we noticed some great changes in All E Technologies' (NSE:ALLETEC) 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. Analysts use this formula to calculate it for All E Technologies:

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

0.24 = ₹288m ÷ (₹1.5b - ₹297m) (Based on the trailing twelve months to June 2024).

Therefore, All E Technologies has an ROCE of 24%. That's a fantastic return and not only that, it outpaces the average of 16% earned by companies in a similar industry.

View our latest analysis for All E Technologies

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating All E Technologies' past further, check out this free graph covering All E Technologies' past earnings, revenue and cash flow.

What Does the ROCE Trend For All E Technologies Tell Us?

We like the trends that we're seeing from All E Technologies. The data shows that returns on capital have increased substantially over the last five years to 24%. The amount of capital employed has increased too, by 287%. So we're very much inspired by what we're seeing at All E Technologies thanks to its ability to profitably reinvest capital.

The Bottom Line

All in all, it's terrific to see that All E Technologies is reaping the rewards from prior investments and is growing its capital base. Since the stock has returned a staggering 296% to shareholders over the last year, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue.

All E Technologies does have some risks though, and we've spotted 1 warning sign for All E Technologies that you might be interested in.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high 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.