Investors Shouldn't Overlook Grupo Aeroportuario del Centro Norte. de's (BMV:OMAB) Impressive Returns On Capital

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. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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. So when we looked at the ROCE trend of Grupo Aeroportuario del Centro Norte. de (BMV:OMAB) we really liked what we saw.

Return On Capital Employed (ROCE): What Is It?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Grupo Aeroportuario del Centro Norte. de is:

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

0.32 = Mex$5.1b ÷ (Mex$20b - Mex$4.3b) (Based on the trailing twelve months to June 2022).

So, Grupo Aeroportuario del Centro Norte. de has an ROCE of 32%. In absolute terms that's a great return and it's even better than the Infrastructure industry average of 11%.

Our analysis indicates that OMA B is potentially undervalued!

In the above chart we have measured Grupo Aeroportuario del Centro Norte. de's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.

What The Trend Of ROCE Can Tell Us

Grupo Aeroportuario del Centro Norte. de is displaying some positive trends. Over the last five years, returns on capital employed have risen substantially to 32%. Basically the business is earning more per dollar of capital invested and in addition to that, 31% more capital is being employed now too. So we're very much inspired by what we're seeing at Grupo Aeroportuario del Centro Norte. de thanks to its ability to profitably reinvest capital.

For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. Effectively this means that suppliers or short-term creditors are now funding 21% of the business, which is more than it was five years ago. It's worth keeping an eye on this because as the percentage of current liabilities to total assets increases, some aspects of risk also increase.

Our Take On Grupo Aeroportuario del Centro Norte. de's ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Grupo Aeroportuario del Centro Norte. de has. And with a respectable 77% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. In light of that, we think it's worth looking further into this stock because if Grupo Aeroportuario del Centro Norte. de can keep these trends up, it could have a bright future ahead.

If you want to continue researching Grupo Aeroportuario del Centro Norte. de, you might be interested to know about the 2 warning signs that our analysis has discovered.

Grupo Aeroportuario del Centro Norte. de is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.