Aleatica. de (BMV:ALEATIC) Has Some Way To Go To Become A Multi-Bagger

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's 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 Aleatica. de (BMV:ALEATIC) and its ROCE trend, we weren't exactly thrilled.

Return On Capital Employed (ROCE): What is it?

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. The formula for this calculation on Aleatica. de is:

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

0.026 = Mex$2.5b ÷ (Mex$103b - Mex$4.8b) (Based on the trailing twelve months to June 2021).

So, Aleatica. de has an ROCE of 2.6%. Ultimately, that's a low return and it under-performs the Infrastructure industry average of 7.8%.

Check out our latest analysis for Aleatica. de

Historical performance is a great place to start when researching a stock so above you can see the gauge for Aleatica. de's ROCE against it's prior returns. If you're interested in investigating Aleatica. de's past further, check out this free graph of past earnings, revenue and cash flow.

How Are Returns Trending?

There hasn't been much to report for Aleatica. 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 unless we see a substantial change at Aleatica. de 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 Aleatica. de's ROCE

In a nutshell, Aleatica. de has been trudging along with the same returns from the same amount of capital over the last five years. And in the last five years, the stock has given away 11% so the market doesn't look too hopeful on these trends strengthening any time soon. 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.

Aleatica. de does have some risks, we noticed 3 warning signs (and 2 which don't sit too well with us) we think you should know about.

While Aleatica. 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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