Under The Bonnet, Wirtualna Polska Holding's (WSE:WPL) Returns Look Impressive

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount 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 Wirtualna Polska Holding's (WSE:WPL) look very promising so lets take a look.

Understanding Return On Capital Employed (ROCE)

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. The formula for this calculation on Wirtualna Polska Holding is:

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

0.20 = zł193m ÷ (zł1.2b - zł235m) (Based on the trailing twelve months to June 2021).

So, Wirtualna Polska Holding has an ROCE of 20%. In absolute terms that's a great return and it's even better than the Interactive Media and Services industry average of 8.4%.

Check out our latest analysis for Wirtualna Polska Holding

In the above chart we have measured Wirtualna Polska Holding's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Wirtualna Polska Holding here for free.

So How Is Wirtualna Polska Holding's ROCE Trending?

We like the trends that we're seeing from Wirtualna Polska Holding. Over the last five years, returns on capital employed have risen substantially to 20%. The amount of capital employed has increased too, by 36%. So we're very much inspired by what we're seeing at Wirtualna Polska Holding thanks to its ability to profitably reinvest capital.

The Key Takeaway

To sum it up, Wirtualna Polska Holding has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has returned a staggering 178% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Wirtualna Polska Holding can keep these trends up, it could have a bright future ahead.

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

Wirtualna Polska Holding is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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.

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