Will Antares Vision (BIT:AV) Multiply In Value Going Forward?

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base 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. Although, when we looked at Antares Vision (BIT:AV), it didn't seem to tick all of these boxes.

What is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Antares Vision is:

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

0.078 = €22m ÷ (€355m - €78m) (Based on the trailing twelve months to June 2020).

So, Antares Vision has an ROCE of 7.8%. Ultimately, that's a low return and it under-performs the Healthcare Services industry average of 11%.

Check out our latest analysis for Antares Vision

In the above chart we have measured Antares Vision's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free report for Antares Vision.

What Can We Tell From Antares Vision's ROCE Trend?

When we looked at the ROCE trend at Antares Vision, we didn't gain much confidence. Around five years ago the returns on capital were 34%, but since then they've fallen to 7.8%. However it looks like Antares Vision might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. It may take some time before the company starts to see any change in earnings from these investments.

On a related note, Antares Vision has decreased its current liabilities to 22% of total assets. So we could link some of this to the decrease in ROCE. Effectively this means their suppliers or short-term creditors are funding less of the business, which reduces some elements of risk. Some would claim this reduces the business' efficiency at generating ROCE since it is now funding more of the operations with its own money.

The Key Takeaway

Bringing it all together, while we're somewhat encouraged by Antares Vision's reinvestment in its own business, we're aware that returns are shrinking. And investors appear hesitant that the trends will pick up because the stock has fallen 10% in the last year. Therefore based on the analysis done in this article, we don't think Antares Vision has the makings of a multi-bagger.

If you want to continue researching Antares Vision, you might be interested to know about the 1 warning sign that our analysis has discovered.

While Antares Vision isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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