Industrie De Nora (BIT:DNR) Is Looking To Continue Growing Its Returns On Capital

To find a multi-bagger stock, what are the underlying trends we should look for in a business? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Industrie De Nora (BIT:DNR) and its trend of ROCE, we really liked what we saw.

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. The formula for this calculation on Industrie De Nora is:

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

0.11 = €124m ÷ (€1.3b - €249m) (Based on the trailing twelve months to September 2024).

Therefore, Industrie De Nora has an ROCE of 11%. By itself that's a normal return on capital and it's in line with the industry's average returns of 11%.

View our latest analysis for Industrie De Nora

In the above chart we have measured Industrie De Nora's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Industrie De Nora .

What The Trend Of ROCE Can Tell Us

Investors would be pleased with what's happening at Industrie De Nora. Over the last five years, returns on capital employed have risen substantially to 11%. The amount of capital employed has increased too, by 65%. So we're very much inspired by what we're seeing at Industrie De Nora thanks to its ability to profitably reinvest capital.

The Key Takeaway

All in all, it's terrific to see that Industrie De Nora is reaping the rewards from prior investments and is growing its capital base. And since the stock has fallen 50% over the last year, there might be an opportunity here. So researching this company further and determining whether or not these trends will continue seems justified.

On a separate note, we've found 2 warning signs for Industrie De Nora you'll probably want to know about.

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.