Glintt - Global Intelligent Technologies (ELI:GLINT) Might Have The Makings Of A Multi-Bagger

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Glintt - Global Intelligent Technologies (ELI:GLINT) and its trend of ROCE, we really liked what we saw.

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. Analysts use this formula to calculate it for Glintt - Global Intelligent Technologies:

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

0.057 = €7.0m ÷ (€201m - €77m) (Based on the trailing twelve months to June 2021).

Thus, Glintt - Global Intelligent Technologies has an ROCE of 5.7%. In absolute terms, that's a low return and it also under-performs the IT industry average of 13%.

See our latest analysis for Glintt - Global Intelligent Technologies

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 want to delve into the historical earnings, revenue and cash flow of Glintt - Global Intelligent Technologies, check out these free graphs here.

What Does the ROCE Trend For Glintt - Global Intelligent Technologies Tell Us?

We're delighted to see that Glintt - Global Intelligent Technologies is reaping rewards from its investments and has now broken into profitability. The company now earns 5.7% on its capital, because five years ago it was incurring losses. While returns have increased, the amount of capital employed by Glintt - Global Intelligent Technologies has remained flat over the period. With no noticeable increase in capital employed, it's worth knowing what the company plans on doing going forward in regards to reinvesting and growing the business. So if you're looking for high growth, you'll want to see a business's capital employed also increasing.

What We Can Learn From Glintt - Global Intelligent Technologies' ROCE

As discussed above, Glintt - Global Intelligent Technologies appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 50% return over the last five years. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

If you'd like to know more about Glintt - Global Intelligent Technologies, we've spotted 2 warning signs, and 1 of them shouldn't be ignored.

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.

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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