Returns At B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (AMS:PORF) Appear To Be Weighed Down

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Having said that, from a first glance at B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 (AMS:PORF) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653, this is the formula:

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

0.015 = €505k ÷ (€37m - €3.6m) (Based on the trailing twelve months to June 2024).

Thus, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has an ROCE of 1.5%. In absolute terms, that's a low return and it also under-performs the Consumer Durables industry average of 9.3%.

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

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653.

How Are Returns Trending?

Things have been pretty stable at B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653, with its capital employed and returns on that capital staying somewhat the same for the last 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 B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger.

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

In a nutshell, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has been trudging along with the same returns from the same amount of capital over the last five years. Unsurprisingly then, the total return to shareholders over the last five years has been flat. Therefore based on the analysis done in this article, we don't think B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has the makings of a multi-bagger.

B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 does have some risks, we noticed 6 warning signs (and 3 which are potentially serious) we think you should know about.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high 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.