PD Omoljica AD u Restrukturiranju's (BELEX:OMOL) Returns On Capital Are Heading Higher

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in PD Omoljica AD u Restrukturiranju's (BELEX:OMOL) returns on capital, so let's have a look.

What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for PD Omoljica AD u Restrukturiranju:

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

0.0021 = дин3.0m ÷ (дин1.5b - дин86m) (Based on the trailing twelve months to June 2024).

Therefore, PD Omoljica AD u Restrukturiranju has an ROCE of 0.2%. Ultimately, that's a low return and it under-performs the Food industry average of 11%.

Check out our latest analysis for PD Omoljica AD u Restrukturiranju

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

What Does the ROCE Trend For PD Omoljica AD u Restrukturiranju Tell Us?

While the ROCE isn't as high as some other companies out there, it's great to see it's on the up. The figures show that over the last four years, ROCE has grown 50% whilst employing roughly the same amount of capital. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.

The Bottom Line On PD Omoljica AD u Restrukturiranju's ROCE

In summary, we're delighted to see that PD Omoljica AD u Restrukturiranju has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for PD Omoljica AD u Restrukturiranju (of which 1 is a bit unpleasant!) that you should know about.

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.