Returns Are Gaining Momentum At B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (AMS:PORF)

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (AMS:PORF) so let's look a bit deeper.

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. Analysts use this formula to calculate it for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653:

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

0.018 = €609k ÷ (€37m - €3.1m) (Based on the trailing twelve months to June 2022).

So, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has an ROCE of 1.8%. In absolute terms, that's a low return and it also under-performs the Consumer Durables industry average of 11%.

See our latest analysis for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653

Historical performance is a great place to start when researching a stock so above you can see the gauge for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's ROCE against it's prior returns. If you'd like to look at how B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has performed in the past in other metrics, you can view this free graph of past earnings, revenue and cash flow.

How Are Returns Trending?

B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 1.8% which is a sight for sore eyes. In addition to that, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 is employing 195% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 8.4%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. This tells us that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

Our Take On B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's ROCE

Long story short, we're delighted to see that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's reinvestment activities have paid off and the company is now profitable. Considering the stock has delivered 32% 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. So with that in mind, we think the stock deserves further research.

One final note, you should learn about the 3 warning signs we've spotted with B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (including 1 which is significant) .

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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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.