What Can The Trends At Be Shaping The Future (BIT:BEST) Tell Us About Their Returns?

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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. So on that note, Be Shaping The Future (BIT:BEST) looks quite promising in regards to its trends of return on capital.

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. Analysts use this formula to calculate it for Be Shaping The Future:

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

0.13 = €15m ÷ (€179m - €63m) (Based on the trailing twelve months to September 2020).

So, Be Shaping The Future has an ROCE of 13%. In absolute terms, that's a satisfactory return, but compared to the IT industry average of 7.9% it's much better.

Check out our latest analysis for Be Shaping The Future

Above you can see how the current ROCE for Be Shaping The Future compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Be Shaping The Future here for free.

What Can We Tell From Be Shaping The Future's ROCE Trend?

Be Shaping The Future is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 13%. The amount of capital employed has increased too, by 40%. So we're very much inspired by what we're seeing at Be Shaping The Future thanks to its ability to profitably reinvest capital.

The Bottom Line On Be Shaping The Future's ROCE

To sum it up, Be Shaping The Future has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has returned a staggering 200% to shareholders over the last five years, it looks like investors are recognizing these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

One more thing to note, we've identified 2 warning signs with Be Shaping The Future and understanding these should be part of your investment process.

While Be Shaping The Future 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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