We Like These Underlying Return On Capital Trends At Grupo Comercial Chedraui. de (BMV:CHDRAUIB)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at Grupo Comercial Chedraui. de (BMV:CHDRAUIB) and its trend of ROCE, we really liked what we saw.

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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 Grupo Comercial Chedraui. de, this is the formula:

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

0.13 = Mex$15b ÷ (Mex$168b - Mex$51b) (Based on the trailing twelve months to December 2024).

So, Grupo Comercial Chedraui. de has an ROCE of 13%. In absolute terms, that's a pretty standard return but compared to the Consumer Retailing industry average it falls behind.

Check out our latest analysis for Grupo Comercial Chedraui. de

Above you can see how the current ROCE for Grupo Comercial Chedraui. de compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Grupo Comercial Chedraui. de .

The Trend Of ROCE

Grupo Comercial Chedraui. de 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 88%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.

The Bottom Line On Grupo Comercial Chedraui. de's ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Grupo Comercial Chedraui. de has. And a remarkable 366% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Grupo Comercial Chedraui. de can keep these trends up, it could have a bright future ahead.

While Grupo Comercial Chedraui. de looks impressive, no company is worth an infinite price. The intrinsic value infographic for CHDRAUI B helps visualize whether it is currently trading for a fair price.

While Grupo Comercial Chedraui. de 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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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.