These Trends Paint A Bright Future For PJSC Russian Aquaculture (MCX:AQUA)

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, the ROCE of PJSC Russian Aquaculture (MCX:AQUA) looks great, so lets see what the trend can tell us.

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 PJSC Russian Aquaculture, this is the formula:

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

0.22 = ₽2.1b ÷ (₽13b - ₽3.7b) (Based on the trailing twelve months to June 2020).

So, PJSC Russian Aquaculture has an ROCE of 22%. In absolute terms that's a great return and it's even better than the Food industry average of 8.1%.

View our latest analysis for PJSC Russian Aquaculture

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 PJSC Russian Aquaculture, check out these free graphs here.

What Does the ROCE Trend For PJSC Russian Aquaculture Tell Us?

PJSC Russian Aquaculture has recently broken into profitability so their prior investments seem to be paying off. About five years ago the company was generating losses but things have turned around because it's now earning 22% on its capital. In addition to that, PJSC Russian Aquaculture is employing 175% more capital than previously which is expected of a company that's trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 27%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. This tells us that PJSC Russian Aquaculture has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

The Bottom Line On PJSC Russian Aquaculture's ROCE

Overall, PJSC Russian Aquaculture gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. Since the stock has returned a staggering 594% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue.

If you want to continue researching PJSC Russian Aquaculture, you might be interested to know about the 4 warning signs that our analysis has discovered.

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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