If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. In light of that, when we looked at Wilh. Wilhelmsen Holding (OB:WWI) and its ROCE trend, we weren't exactly thrilled.
What Is Return On Capital Employed (ROCE)?
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 Wilh. Wilhelmsen Holding:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.031 = US$103m ÷ (US$4.0b - US$688m) (Based on the trailing twelve months to March 2025).
Thus, Wilh. Wilhelmsen Holding has an ROCE of 3.1%. In absolute terms, that's a low return and it also under-performs the Shipping industry average of 9.2%.
View our latest analysis for Wilh. Wilhelmsen Holding
Above you can see how the current ROCE for Wilh. Wilhelmsen Holding compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Wilh. Wilhelmsen Holding for free.
How Are Returns Trending?
The returns on capital haven't changed much for Wilh. Wilhelmsen Holding in recent years. The company has employed 51% more capital in the last five years, and the returns on that capital have remained stable at 3.1%. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.
The Bottom Line
As we've seen above, Wilh. Wilhelmsen Holding's returns on capital haven't increased but it is reinvesting in the business. Yet to long term shareholders the stock has gifted them an incredible 395% return in the last five years, so the market appears to be rosy about its future. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.
If you'd like to know more about Wilh. Wilhelmsen Holding, we've spotted 2 warning signs, and 1 of them is significant.
While Wilh. Wilhelmsen Holding isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
Valuation is complex, but we're here to simplify it.
Discover if Wilh. Wilhelmsen Holding might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.