Nodebis Applications (NGM:NODE) Shareholders Will Want The ROCE Trajectory To Continue

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. 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at Nodebis Applications (NGM:NODE) so let's look a bit deeper.

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

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Nodebis Applications is:

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

0.057 = kr6.8m ÷ (kr164m - kr44m) (Based on the trailing twelve months to September 2025).

Therefore, Nodebis Applications has an ROCE of 5.7%. In absolute terms, that's a low return and it also under-performs the IT industry average of 11%.

See our latest analysis for Nodebis Applications

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're interested in investigating Nodebis Applications' past further, check out this free graph covering Nodebis Applications' past earnings, revenue and cash flow.

What Can We Tell From Nodebis Applications' ROCE Trend?

We're delighted to see that Nodebis Applications is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses three years ago, but now it's earning 5.7% which is a sight for sore eyes. Not only that, but the company is utilizing 134% more capital than before, but that's to be expected from a company trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

On a related note, the company's ratio of current liabilities to total assets has decreased to 27%, which basically reduces it's funding from the likes of short-term creditors or suppliers. So shareholders would be pleased that the growth in returns has mostly come from underlying business performance.

The Bottom Line On Nodebis Applications' ROCE

To the delight of most shareholders, Nodebis Applications has now broken into profitability. Since the stock has returned a staggering 205% to shareholders over the last three years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Nodebis Applications can keep these trends up, it could have a bright future ahead.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 5 warning signs for Nodebis Applications (of which 1 makes us a bit uncomfortable!) that you should know about.

While Nodebis Applications isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.