Returns At Grupo Cementos de Chihuahua. de (BMV:GCC) Are On The Way Up

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. 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, Grupo Cementos de Chihuahua. de (BMV:GCC) looks quite promising in regards to its trends of return on capital.

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 Grupo Cementos de Chihuahua. de is:

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

0.13 = US$234m ÷ (US$2.2b - US$343m) (Based on the trailing twelve months to June 2021).

So, Grupo Cementos de Chihuahua. de has an ROCE of 13%. By itself that's a normal return on capital and it's in line with the industry's average returns of 13%.

Check out our latest analysis for Grupo Cementos de Chihuahua. de

In the above chart we have measured Grupo Cementos de Chihuahua. de'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 Grupo Cementos de Chihuahua. de here for free.

The Trend Of ROCE

The trends we've noticed at Grupo Cementos de Chihuahua. de are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 13%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 30%. 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.

Our Take On Grupo Cementos de Chihuahua. de's ROCE

To sum it up, Grupo Cementos de Chihuahua. de has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And a remarkable 227% 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 Cementos de Chihuahua. de can keep these trends up, it could have a bright future ahead.

If you want to continue researching Grupo Cementos de Chihuahua. de, you might be interested to know about the 1 warning sign that our analysis has discovered.

While Grupo Cementos de Chihuahua. de 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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