The Returns At Minera Frisco. de (BMV:MFRISCOA-1) Aren't Growing

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. 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 Minera Frisco. de (BMV:MFRISCOA-1) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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 Minera Frisco. de:

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

0.021 = Mex$693m ÷ (Mex$42b - Mex$9.0b) (Based on the trailing twelve months to September 2021).

Therefore, Minera Frisco. de has an ROCE of 2.1%. In absolute terms, that's a low return and it also under-performs the Metals and Mining industry average of 24%.

Check out our latest analysis for Minera Frisco. de

In the above chart we have measured Minera Frisco. 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 Minera Frisco. de here for free.

So How Is Minera Frisco. de's ROCE Trending?

There hasn't been much to report for Minera Frisco. de's returns and its level of capital employed because both metrics have been steady for the past 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 Minera Frisco. de doesn't end up being a multi-bagger in a few years time.

The Key Takeaway

In a nutshell, Minera Frisco. de has been trudging along with the same returns from the same amount of capital over the last five years. Moreover, since the stock has crumbled 78% over the last five years, it appears investors are expecting the worst. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.

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

While Minera Frisco. 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.