Stock Analysis

There's Been No Shortage Of Growth Recently For Mintra Holding's (OB:MNTR) Returns On Capital

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OB:MNTR
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If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So on that note, Mintra Holding (OB:MNTR) 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 Mintra Holding:

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

0.062 = kr51m ÷ (kr1.1b - kr244m) (Based on the trailing twelve months to December 2022).

So, Mintra Holding has an ROCE of 6.2%. Even though it's in line with the industry average of 6.2%, it's still a low return by itself.

View our latest analysis for Mintra Holding

roce
OB:MNTR Return on Capital Employed July 7th 2023

In the above chart we have measured Mintra Holding'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.

SWOT Analysis for Mintra Holding

Strength
  • Earnings growth over the past year exceeded the industry.
  • Debt is not viewed as a risk.
  • Dividend is in the top 25% of dividend payers in the market.
Weakness
  • No major weaknesses identified for MNTR.
Opportunity
  • Annual revenue is forecast to grow faster than the Norwegian market.
  • Good value based on P/E ratio and estimated fair value.
Threat
  • Dividends are not covered by earnings and cashflows.

What The Trend Of ROCE Can Tell Us

Mintra Holding has recently broken into profitability so their prior investments seem to be paying off. Shareholders would no doubt be pleased with this because the business was loss-making four years ago but is is now generating 6.2% on its capital. And unsurprisingly, like most companies trying to break into the black, Mintra Holding is utilizing 198% more capital than it was four years ago. 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 23%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. Therefore we can rest assured that the growth in ROCE is a result of the business' fundamental improvements, rather than a cooking class featuring this company's books.

In Conclusion...

To the delight of most shareholders, Mintra Holding has now broken into profitability. Since the stock has only returned 3.0% to shareholders over the last year, the promising fundamentals may not be recognized yet by investors. So with that in mind, we think the stock deserves further research.

On a final note, we found 2 warning signs for Mintra Holding (1 shouldn't be ignored) you should be aware of.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Mintra Holding is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.