Investors Will Want WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji's (WSE:WOD) Growth In ROCE To Persist

What trends should we look for it we want to identify stocks that can multiply in value over the long term? 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji (WSE:WOD) so let's look a bit deeper.

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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. Analysts use this formula to calculate it for WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji:

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

0.00097 = zł233k ÷ (zł253m - zł12m) (Based on the trailing twelve months to September 2025).

So, WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji has an ROCE of 0.1%. In absolute terms, that's a low return and it also under-performs the Water Utilities industry average of 4.4%.

See our latest analysis for WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji

Historical performance is a great place to start when researching a stock so above you can see the gauge for WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji's ROCE against it's prior returns. If you'd like to look at how WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji has performed in the past in other metrics, you can view this free graph of WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji's past earnings, revenue and cash flow.

What Does the ROCE Trend For WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji Tell Us?

Shareholders will be relieved that WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji has broken into profitability. While the business was unprofitable in the past, it's now turned things around and is earning 0.1% on its capital. While returns have increased, the amount of capital employed by WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji has remained flat over the period. So while we're happy that the business is more efficient, just keep in mind that could mean that going forward the business is lacking areas to invest internally for growth. After all, a company can only become a long term multi-bagger if it continually reinvests in itself at high rates of return.

Our Take On WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji's ROCE

As discussed above, WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. Given the stock has declined 16% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji (of which 2 are a bit unpleasant!) that you should know about.

While WODKAN Przedsiebiorstwo Wodociagów i Kanalizacji isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.