Corporación América Airports (NYSE:CAAP) Is Looking To Continue Growing Its Returns On Capital

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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Corporación América Airports' (NYSE:CAAP) returns on capital, so let's have a look.

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What Is 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. The formula for this calculation on Corporación América Airports is:

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

0.11 = US$410m ÷ (US$4.3b - US$549m) (Based on the trailing twelve months to March 2025).

Thus, Corporación América Airports has an ROCE of 11%. In absolute terms, that's a satisfactory return, but compared to the Infrastructure industry average of 7.4% it's much better.

View our latest analysis for Corporación América Airports

In the above chart we have measured Corporación América Airports' 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 analyst report for Corporación América Airports .

How Are Returns Trending?

Corporación América Airports is displaying some positive trends. The data shows that returns on capital have increased substantially over the last five years to 11%. The amount of capital employed has increased too, by 25%. So we're very much inspired by what we're seeing at Corporación América Airports thanks to its ability to profitably reinvest capital.

Our Take On Corporación América Airports' ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Corporación América Airports has. Since the stock has returned a staggering 674% to shareholders over the last five 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 Corporación América Airports can keep these trends up, it could have a bright future ahead.

Corporación América Airports does have some risks though, and we've spotted 1 warning sign for Corporación América Airports that you might be interested in.

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.