1-800-FLOWERS.COM (NASDAQ:FLWS) Has More To Do To Multiply In Value Going Forward

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, 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. However, after investigating 1-800-FLOWERS.COM (NASDAQ:FLWS), we don't think it's current trends fit the mold of a multi-bagger.

What is Return On Capital Employed (ROCE)?

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 1-800-FLOWERS.COM, this is the formula:

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

0.098 = US$84m ÷ (US$1.1b - US$268m) (Based on the trailing twelve months to March 2022).

So, 1-800-FLOWERS.COM has an ROCE of 9.8%. On its own, that's a low figure but it's around the 11% average generated by the Online Retail industry.

Check out our latest analysis for 1-800-FLOWERS.COM

In the above chart we have measured 1-800-FLOWERS.COM's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.

The Trend Of ROCE

The returns on capital haven't changed much for 1-800-FLOWERS.COM in recent years. Over the past five years, ROCE has remained relatively flat at around 9.8% and the business has deployed 104% more capital into its operations. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don't provide a high return on capital.

The Bottom Line On 1-800-FLOWERS.COM's ROCE

In conclusion, 1-800-FLOWERS.COM has been investing more capital into the business, but returns on that capital haven't increased. Additionally, the stock's total return to shareholders over the last five years has been flat, which isn't too surprising. Therefore based on the analysis done in this article, we don't think 1-800-FLOWERS.COM has the makings of a multi-bagger.

One more thing: We've identified 3 warning signs with 1-800-FLOWERS.COM (at least 1 which is potentially serious) , and understanding these would certainly be useful.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.