01Cyberaton Proenergy Spolka Akcyjna (WSE:01C) Is Looking To Continue Growing Its Returns On Capital

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So when we looked at 01Cyberaton Proenergy Spolka Akcyjna (WSE:01C) and its trend of ROCE, we really liked what we saw.

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. Analysts use this formula to calculate it for 01Cyberaton Proenergy Spolka Akcyjna:

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

0.037 = zł4.7m ÷ (zł137m - zł11m) (Based on the trailing twelve months to September 2021).

Therefore, 01Cyberaton Proenergy Spolka Akcyjna has an ROCE of 3.7%. In absolute terms, that's a low return and it also under-performs the Renewable Energy industry average of 4.7%.

View our latest analysis for 01Cyberaton Proenergy Spolka Akcyjna

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating 01Cyberaton Proenergy Spolka Akcyjna's past further, check out this free graph of past earnings, revenue and cash flow.

How Are Returns Trending?

01Cyberaton Proenergy Spolka Akcyjna has recently broken into profitability so their prior investments seem to be paying off. About five years ago the company was generating losses but things have turned around because it's now earning 3.7% on its capital. Not only that, but the company is utilizing 135% more capital than before, but that's to be expected from a company trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

In Conclusion...

Long story short, we're delighted to see that 01Cyberaton Proenergy Spolka Akcyjna's reinvestment activities have paid off and the company is now profitable. And a remarkable 133% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

01Cyberaton Proenergy Spolka Akcyjna does come with some risks though, we found 4 warning signs in our investment analysis, and 1 of those is concerning...

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.