Organización Soriana S. A. B. de C. V (BMV:SORIANAB) Has Some Way To Go To Become A Multi-Bagger

There are a few key trends to look for if we want to identify the next multi-bagger. 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Although, when we looked at Organización Soriana S. A. B. de C. V (BMV:SORIANAB), 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 Organización Soriana S. A. B. de C. V is:

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

0.081 = Mex$9.3b ÷ (Mex$151b - Mex$35b) (Based on the trailing twelve months to March 2024).

Thus, Organización Soriana S. A. B. de C. V has an ROCE of 8.1%. Ultimately, that's a low return and it under-performs the Consumer Retailing industry average of 18%.

Check out 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, you can check out the forecasts from the analysts covering Organización Soriana S. A. B. de C. V for free.

How Are Returns 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.

What We Can Learn From Organización Soriana S. A. B. de C. V's ROCE

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. Since the stock has gained an impressive 48% over the last five years, investors must think there's better things to come. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

Organización Soriana S. A. B. de C. V could be trading at an attractive price in other respects, so you might find our free intrinsic value estimation for SORIANA B on our platform quite valuable.

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