Return Trends At Organización Soriana S. A. B. de C. V (BMV:SORIANAB) Aren't Appealing

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base 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. However, after briefly looking over the numbers, we don't think Organización Soriana S. A. B. de C. V (BMV:SORIANAB) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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. 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)

0.084 = Mex$9.4b ÷ (Mex$146b - Mex$35b) (Based on the trailing twelve months to September 2023).

Thus, Organización Soriana S. A. B. de C. V has an ROCE of 8.4%. Ultimately, that's a low return and it under-performs the Consumer Retailing industry average of 18%.

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

Above you can see how the current ROCE for Organización Soriana S. A. B. de C. V compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free report for Organización Soriana S. A. B. de C. V.

What Does the ROCE Trend For Organización Soriana S. A. B. de C. V Tell Us?

There hasn't been much to report for Organización Soriana S. A. B. de C. V's returns and its level of capital employed because both metrics have been steady for the past five years. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So unless we see a substantial change at Organización Soriana S. A. B. de C. V in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger.

The Bottom Line On Organización Soriana S. A. B. de C. V's ROCE

In a nutshell, Organización Soriana S. A. B. de C. V has been trudging along with the same returns from the same amount of capital over the last five years. Although the market must be expecting these trends to improve because the stock has gained 41% over the last five years. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

If you're still interested in Organización Soriana S. A. B. de C. V it's worth checking out our FREE intrinsic value approximation to see if it's trading at an attractive price in other respects.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.