Returns On Capital At Gielda Praw Majatkowych Vindexus Spolka Akcyjna (WSE:VIN) Paint A Concerning Picture

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding 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. In light of that, when we looked at Gielda Praw Majatkowych Vindexus Spolka Akcyjna (WSE:VIN) and its ROCE trend, we weren't exactly thrilled.

Return On Capital Employed (ROCE): What is it?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Gielda Praw Majatkowych Vindexus Spolka Akcyjna:

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

0.049 = zł13m ÷ (zł291m - zł27m) (Based on the trailing twelve months to September 2020).

Thus, Gielda Praw Majatkowych Vindexus Spolka Akcyjna has an ROCE of 4.9%. In absolute terms, that's a low return and it also under-performs the Commercial Services industry average of 14%.

Check out our latest analysis for Gielda Praw Majatkowych Vindexus Spolka Akcyjna

Historical performance is a great place to start when researching a stock so above you can see the gauge for Gielda Praw Majatkowych Vindexus Spolka Akcyjna's ROCE against it's prior returns. If you want to delve into the historical earnings, revenue and cash flow of Gielda Praw Majatkowych Vindexus Spolka Akcyjna, check out these free graphs here.

What Does the ROCE Trend For Gielda Praw Majatkowych Vindexus Spolka Akcyjna Tell Us?

In terms of Gielda Praw Majatkowych Vindexus Spolka Akcyjna's historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 13% over the last five years. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.

The Bottom Line On Gielda Praw Majatkowych Vindexus Spolka Akcyjna's ROCE

To conclude, we've found that Gielda Praw Majatkowych Vindexus Spolka Akcyjna is reinvesting in the business, but returns have been falling. Unsurprisingly then, the total return to shareholders over the last five years has been flat. In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere.

If you'd like to know more about Gielda Praw Majatkowych Vindexus Spolka Akcyjna, we've spotted 5 warning signs, and 2 of them don't sit too well with us.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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