Promotora y Operadora de Infraestructura S. A. B. de C. V's (BMV:PINFRA) Returns On Capital Are Heading Higher

To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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, Promotora y Operadora de Infraestructura S. A. B. de C. V (BMV:PINFRA) looks quite promising in regards to its trends of return on capital.

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

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Promotora y Operadora de Infraestructura S. A. B. de C. V:

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

0.14 = Mex$11b ÷ (Mex$80b - Mex$5.8b) (Based on the trailing twelve months to June 2024).

Thus, Promotora y Operadora de Infraestructura S. A. B. de C. V has an ROCE of 14%. In absolute terms, that's a pretty standard return but compared to the Infrastructure industry average it falls behind.

View our latest analysis for Promotora y Operadora de Infraestructura S. A. B. de C. V

Above you can see how the current ROCE for Promotora y Operadora de Infraestructura 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 analyst report for Promotora y Operadora de Infraestructura S. A. B. de C. V .

The Trend Of ROCE

Investors would be pleased with what's happening at Promotora y Operadora de Infraestructura S. A. B. de C. V. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 14%. 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 26%. So we're very much inspired by what we're seeing at Promotora y Operadora de Infraestructura S. A. B. de C. V thanks to its ability to profitably reinvest capital.

Our Take On Promotora y Operadora de Infraestructura S. A. B. de C. V'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 Promotora y Operadora de Infraestructura S. A. B. de C. V has. Considering the stock has delivered 14% to its stockholders over the last five years, it may be fair to think that investors aren't fully aware of the promising trends yet. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term.

One more thing, we've spotted 2 warning signs facing Promotora y Operadora de Infraestructura S. A. B. de C. V that you might find interesting.

While Promotora y Operadora de Infraestructura S. A. B. de C. V 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.