Investors Shouldn't Overlook AAK AB (publ.)'s (STO:AAK) Impressive Returns On Capital

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. And in light of that, the trends we're seeing at AAK AB (publ.)'s (STO:AAK) look very promising so lets take a look.

Our free stock report includes 1 warning sign investors should be aware of before investing in AAK AB (publ.). Read for free now.

Understanding 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 AAK AB (publ.):

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

0.22 = kr4.9b ÷ (kr32b - kr10b) (Based on the trailing twelve months to March 2025).

So, AAK AB (publ.) has an ROCE of 22%. In absolute terms that's a great return and it's even better than the Food industry average of 10%.

View our latest analysis for AAK AB (publ.)

In the above chart we have measured AAK AB (publ.)'s prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for AAK AB (publ.) .

So How Is AAK AB (publ.)'s ROCE Trending?

Investors would be pleased with what's happening at AAK AB (publ.). The data shows that returns on capital have increased substantially over the last five years to 22%. The amount of capital employed has increased too, by 33%. So we're very much inspired by what we're seeing at AAK AB (publ.) thanks to its ability to profitably reinvest capital.

The Bottom Line On AAK AB (publ.)'s ROCE

In summary, it's great to see that AAK AB (publ.) can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with a respectable 66% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

One more thing to note, we've identified 1 warning sign with AAK AB (publ.) and understanding this should be part of your investment process.

AAK AB (publ.) is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.