Kino Polska TV Spolka Akcyjna (WSE:KPL) Could Become A Multi-Bagger

What are the early trends we should look for to identify a stock that could 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. And in light of that, the trends we're seeing at Kino Polska TV Spolka Akcyjna's (WSE:KPL) look very promising so lets take a look.

What Is Return On Capital Employed (ROCE)?

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. The formula for this calculation on Kino Polska TV Spolka Akcyjna is:

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

0.24 = zł65m ÷ (zł347m - zł78m) (Based on the trailing twelve months to December 2023).

So, Kino Polska TV Spolka Akcyjna has an ROCE of 24%. In absolute terms that's a great return and it's even better than the Media industry average of 14%.

Check out our latest analysis for Kino Polska TV Spolka Akcyjna

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

What Does the ROCE Trend For Kino Polska TV Spolka Akcyjna Tell Us?

Investors would be pleased with what's happening at Kino Polska TV Spolka Akcyjna. Over the last five years, returns on capital employed have risen substantially to 24%. The amount of capital employed has increased too, by 73%. So we're very much inspired by what we're seeing at Kino Polska TV Spolka Akcyjna thanks to its ability to profitably reinvest capital.

In Conclusion...

In summary, it's great to see that Kino Polska TV Spolka Akcyjna can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. Since the stock has returned a solid 60% to shareholders over the last five years, it's fair to say investors are beginning to recognize these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

Like most companies, Kino Polska TV Spolka Akcyjna does come with some risks, and we've found 1 warning sign that you should be aware of.

If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.

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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.