Gremi Media (WSE:GME) Is Doing The Right Things To Multiply Its Share Price

If you're looking for a multi-bagger, there's a few things to keep an eye out 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Speaking of which, we noticed some great changes in Gremi Media's (WSE:GME) returns on capital, so let's have a look.

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

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Gremi Media, this is the formula:

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

0.15 = zł16m ÷ (zł140m - zł35m) (Based on the trailing twelve months to September 2021).

Thus, Gremi Media has an ROCE of 15%. That's a relatively normal return on capital, and it's around the 17% generated by the Media industry.

View our latest analysis for Gremi Media

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

What Can We Tell From Gremi Media's ROCE Trend?

We like the trends that we're seeing from Gremi Media. Over the last five years, returns on capital employed have risen substantially to 15%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 32%. So we're very much inspired by what we're seeing at Gremi Media thanks to its ability to profitably reinvest capital.

In Conclusion...

All in all, it's terrific to see that Gremi Media is reaping the rewards from prior investments and is growing its capital base. And since the stock has dived 93% over the last three years, there may be other factors affecting the company's prospects. In any case, we believe the economic trends of this company are positive and looking into the stock further could prove rewarding.

On a separate note, we've found 3 warning signs for Gremi Media you'll probably want to 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.