Shareholders Would Enjoy A Repeat Of Kancelaria Medius' (WSE:KME) Recent Growth In Returns

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. And in light of that, the trends we're seeing at Kancelaria Medius' (WSE:KME) look very promising so lets take a look.

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Understanding 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. The formula for this calculation on Kancelaria Medius is:

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

0.29 = zł11m ÷ (zł44m - zł5.5m) (Based on the trailing twelve months to June 2025).

Thus, Kancelaria Medius has an ROCE of 29%. In absolute terms that's a great return and it's even better than the Commercial Services industry average of 14%.

View our latest analysis for Kancelaria Medius

Historical performance is a great place to start when researching a stock so above you can see the gauge for Kancelaria Medius' ROCE against it's prior returns. If you're interested in investigating Kancelaria Medius' past further, check out this free graph covering Kancelaria Medius' past earnings, revenue and cash flow.

How Are Returns Trending?

Like most people, we're pleased that Kancelaria Medius is now generating some pretax earnings. Historically the company was generating losses but as we can see from the latest figures referenced above, they're now earning 29% on their capital employed. In regards to capital employed, Kancelaria Medius is using 56% less capital than it was five years ago, which on the surface, can indicate that the business has become more efficient at generating these returns. This could potentially mean that the company is selling some of its assets.

On a related note, the company's ratio of current liabilities to total assets has decreased to 12%, which basically reduces it's funding from the likes of short-term creditors or suppliers. So this improvement in ROCE has come from the business' underlying economics, which is great to see.

The Bottom Line On Kancelaria Medius' ROCE

In summary, it's great to see that Kancelaria Medius has been able to turn things around and earn higher returns on lower amounts of capital. Astute investors may have an opportunity here because the stock has declined 43% in the last five years. With that in mind, we believe the promising trends warrant this stock for further investigation.

On a separate note, we've found 3 warning signs for Kancelaria Medius you'll probably want to know about.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning 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.