Organización Soriana S. A. B. de C. V (BMV:SORIANAB) Has More To Do To Multiply In Value Going Forward

What are the early trends we should look for to identify a stock that could multiply in value over the long term? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. In light of that, when we looked at Organización Soriana S. A. B. de C. V (BMV:SORIANAB) and its ROCE trend, we weren't exactly thrilled.

What Is Return On Capital Employed (ROCE)?

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. Analysts use this formula to calculate it for Organización Soriana S. A. B. de C. V:

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

0.077 = Mex$9.0b ÷ (Mex$152b - Mex$36b) (Based on the trailing twelve months to September 2024).

Therefore, Organización Soriana S. A. B. de C. V has an ROCE of 7.7%. In absolute terms, that's a low return and it also under-performs the Consumer Retailing industry average of 16%.

See our latest analysis for Organización Soriana S. A. B. de C. V

In the above chart we have measured Organización Soriana S. A. B. de C. V'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 analyst report for Organización Soriana S. A. B. de C. V .

So How Is Organización Soriana S. A. B. de C. V's ROCE Trending?

Things have been pretty stable at Organización Soriana S. A. B. de C. V, with its capital employed and returns on that capital staying somewhat the same for the last five years. It's not uncommon to see this when looking at a mature and stable business that isn't re-investing its earnings because it has likely passed that phase of the business cycle. So don't be surprised if Organización Soriana S. A. B. de C. V doesn't end up being a multi-bagger in a few years time.

The Key Takeaway

We can conclude that in regards to Organización Soriana S. A. B. de C. V's returns on capital employed and the trends, there isn't much change to report on. Unsurprisingly, the stock has only gained 25% over the last five years, which potentially indicates that investors are accounting for this going forward. Therefore, if you're looking for a multi-bagger, we'd propose looking at other options.

While Organización Soriana S. A. B. de C. V doesn't shine too bright in this respect, it's still worth seeing if the company is trading at attractive prices. You can find that out with our FREE intrinsic value estimation for SORIANA B on our platform.

While Organización Soriana S. A. B. de C. V 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.