Shareholders Would Enjoy A Repeat Of S.C. Chimcomplex's (BVB:CRC) Recent Growth In Returns

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. 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. 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 the ROCE trend of S.C. Chimcomplex (BVB:CRC) we really liked what we saw.

Return On Capital Employed (ROCE): What Is It?

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 S.C. Chimcomplex, this is the formula:

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

0.33 = RON459m ÷ (RON1.7b - RON294m) (Based on the trailing twelve months to June 2022).

Therefore, S.C. Chimcomplex has an ROCE of 33%. In absolute terms that's a great return and it's even better than the Chemicals industry average of 13%.

View our latest analysis for S.C. Chimcomplex

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'd like to look at how S.C. Chimcomplex has performed in the past in other metrics, you can view this free graph of past earnings, revenue and cash flow.

What Does the ROCE Trend For S.C. Chimcomplex Tell Us?

Investors would be pleased with what's happening at S.C. Chimcomplex. Over the last five years, returns on capital employed have risen substantially to 33%. Basically the business is earning more per dollar of capital invested and in addition to that, 485% more capital is being employed now too. So we're very much inspired by what we're seeing at S.C. Chimcomplex thanks to its ability to profitably reinvest capital.

The Bottom Line On S.C. Chimcomplex's ROCE

To sum it up, S.C. Chimcomplex has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has only returned 4.3% to shareholders over the last year, the promising fundamentals may not be recognized yet by investors. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

On a separate note, we've found 4 warning signs for S.C. Chimcomplex you'll probably want to know about.

If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.

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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.