Returns At B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (AMS:PORF) Are On The Way Up

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. 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?

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. 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)

0.0047 = €141k ÷ (€33m - €2.6m) (Based on the trailing twelve months to December 2020).

So, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has an ROCE of 0.5%. Ultimately, that's a low return and it under-performs the Consumer Durables industry average of 9.7%.

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 want to delve into the historical earnings, revenue and cash flow of B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653, check out these free graphs here.

What Does the ROCE Trend For B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 Tell Us?

B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has recently broken into profitability so their prior investments seem to be paying off. About five years ago the company was generating losses but things have turned around because it's now earning 0.5% on its capital. In addition to that, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 is employing 152% 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.

On a related note, the company's ratio of current liabilities to total assets has decreased to 7.9%, which basically reduces it's funding from the likes of short-term creditors or suppliers. 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.

The Bottom Line On B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's ROCE

In summary, it's great to see that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has managed to break into profitability and is continuing to reinvest in its business. Since the stock has only returned 8.1% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

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 a bit concerning) .

While B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 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. 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.
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