Returns At Class Editori (BIT:CLE) Are On The Way Up

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, we've noticed some promising trends at Class Editori (BIT:CLE) so let's look a bit deeper.

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

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Class Editori, this is the formula:

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

0.013 = €921k ÷ (€165m - €91m) (Based on the trailing twelve months to March 2025).

So, Class Editori has an ROCE of 1.3%. In absolute terms, that's a low return and it also under-performs the Media industry average of 11%.

Check out our latest analysis for Class Editori

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 Class Editori's past further, check out this free graph covering Class Editori's past earnings, revenue and cash flow.

What Does the ROCE Trend For Class Editori Tell Us?

Like most people, we're pleased that Class Editori is now generating some pretax earnings. Historically the company was generating losses but as we can see from the latest figures referenced above, they're now earning 1.3% on their capital employed. In regards to capital employed, Class Editori is using 44% less capital than it was five years ago, which on the surface, can indicate that the business has become more efficient at generating these returns. Class Editori could be selling under-performing assets since the ROCE is improving.

On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities. Essentially the business now has suppliers or short-term creditors funding about 55% of its operations, which isn't ideal. And with current liabilities at those levels, that's pretty high.

The Bottom Line On Class Editori's ROCE

In summary, it's great to see that Class Editori has been able to turn things around and earn higher returns on lower amounts of capital. And with a respectable 49% 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. In light of that, we think it's worth looking further into this stock because if Class Editori can keep these trends up, it could have a bright future ahead.

On a final note, we found 3 warning signs for Class Editori (1 is potentially serious) you should be aware of.

While Class Editori 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.