The Trend Of High Returns At QuickBit eu (NGM:QBIT) Has Us Very Interested

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding 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. So when we looked at the ROCE trend of QuickBit eu (NGM:QBIT) we really liked what we saw.

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 QuickBit eu:

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

0.46 = kr86m ÷ (kr221m - kr33m) (Based on the trailing twelve months to June 2020).

Thus, QuickBit eu has an ROCE of 46%. That's a fantastic return and not only that, it outpaces the average of 16% earned by companies in a similar industry.

See our latest analysis for QuickBit eu

Historical performance is a great place to start when researching a stock so above you can see the gauge for QuickBit eu's ROCE against it's prior returns. If you want to delve into the historical earnings, revenue and cash flow of QuickBit eu, check out these free graphs here.

What Does the ROCE Trend For QuickBit eu Tell Us?

We're delighted to see that QuickBit eu is reaping rewards from its investments and is now generating some pre-tax profits. About three years ago the company was generating losses but things have turned around because it's now earning 46% on its capital. And unsurprisingly, like most companies trying to break into the black, QuickBit eu is utilizing 4,736% more capital than it was three years ago. 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.

The Bottom Line On QuickBit eu's ROCE

To the delight of most shareholders, QuickBit eu has now broken into profitability. Astute investors may have an opportunity here because the stock has declined 30% in the last year. With that in mind, we believe the promising trends warrant this stock for further investigation.

One final note, you should learn about the 4 warning signs we've spotted with QuickBit eu (including 1 which is shouldn't be ignored) .

High returns are a key ingredient to strong performance, so check out our free list ofstocks earning high returns on equity with solid balance sheets.

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This article by Simply Wall St is general in nature. 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.
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