Here's What To Make Of Excelerate Energy's (NYSE:EE) Decelerating Rates Of Return

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Having said that, from a first glance at Excelerate Energy (NYSE:EE) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

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

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. To calculate this metric for Excelerate Energy, this is the formula:

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

0.088 = US$236m ÷ (US$2.9b - US$233m) (Based on the trailing twelve months to March 2025).

Therefore, Excelerate Energy has an ROCE of 8.8%. In absolute terms, that's a low return but it's around the Oil and Gas industry average of 9.8%.

View our latest analysis for Excelerate Energy

In the above chart we have measured Excelerate Energy'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 Excelerate Energy .

What Can We Tell From Excelerate Energy's ROCE Trend?

There are better returns on capital out there than what we're seeing at Excelerate Energy. The company has consistently earned 8.8% for the last five years, and the capital employed within the business has risen 34% in that time. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

What We Can Learn From Excelerate Energy's ROCE

In conclusion, Excelerate Energy has been investing more capital into the business, but returns on that capital haven't increased. Although the market must be expecting these trends to improve because the stock has gained 28% over the last three years. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

While Excelerate Energy doesn't shine too bright in this respect, it's still worth seeing if the company is trading at attractive prices. You can find that out with our FREE intrinsic value estimation for EE on our platform.

While Excelerate Energy 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.