Semapa - Sociedade de Investimento e Gestão SGPS (ELI:SEM) Might Have The Makings Of A Multi-Bagger

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Speaking of which, we noticed some great changes in Semapa - Sociedade de Investimento e Gestão SGPS' (ELI:SEM) returns on capital, so let's have a look.

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What Is 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. To calculate this metric for Semapa - Sociedade de Investimento e Gestão SGPS, this is the formula:

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

0.084 = €329m ÷ (€5.3b - €1.4b) (Based on the trailing twelve months to September 2025).

Therefore, Semapa - Sociedade de Investimento e Gestão SGPS has an ROCE of 8.4%. In absolute terms, that's a low return, but it's much better than the Forestry industry average of 4.1%.

View our latest analysis for Semapa - Sociedade de Investimento e Gestão SGPS

In the above chart we have measured Semapa - Sociedade de Investimento e Gestão SGPS' prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Semapa - Sociedade de Investimento e Gestão SGPS .

What Can We Tell From Semapa - Sociedade de Investimento e Gestão SGPS' ROCE Trend?

While in absolute terms it isn't a high ROCE, it's promising to see that it has been moving in the right direction. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 8.4%. 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 28%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.

Our Take On Semapa - Sociedade de Investimento e Gestão SGPS' ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Semapa - Sociedade de Investimento e Gestão SGPS has. And a remarkable 170% total return over the last five years tells us that investors are expecting more good things to come in the future. Therefore, we think it would be worth your time to check if these trends are going to continue.

On a separate note, we've found 3 warning signs for Semapa - Sociedade de Investimento e Gestão SGPS you'll probably want to know about.

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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.