Why we love feedback at VERBIO Vereinigte BioEnergie (ETR:VBK)
If you’re looking for a multi-bagger, there are a few things to watch out for. First, we would like to identify a growth to return to on capital employed (ROCE) and at the same time, a based capital employed. If you see this, it usually means it’s a company with a great business model and lots of profitable reinvestment opportunities. And in light of that, the trends we see at VERBIO Vereinigte BioEnergie’s (ETR:VBK) looks very promising, so let’s take a look.
Return on capital employed (ROCE): what is it?
Just to clarify if you’re not sure, ROCE is a measure of the pre-tax income (as a percentage) that a business earns on the capital invested in its business. Analysts use this formula to calculate it for VERBIO Vereinigte BioEnergie:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.22 = €132m ÷ (€755m – €164m) (Based on the last twelve months to September 2021).
Therefore, VERBIO Vereinigte BioEnergie has a ROCE of 22%. In absolute terms, this is an excellent return and is even better than the oil and gas industry average of 12%.
Check out our latest analysis for VERBIO Vereinigte BioEnergie
Above you can see how VERBIO Vereinigte BioEnergie’s current ROCE compares to its past returns on capital, but there is little you can say about the past. If you want to see what analysts are predicting for the future, you should check out our free report for VERBIO Vereinigte BioEnergie.
What the ROCE trend can tell us
VERBIO Vereinigte BioEnergie shows positive trends. Figures show that over the past five years, returns generated on capital employed have increased significantly to 22%. The amount of capital employed also increased by 115%. This may indicate that there are many opportunities to invest capital internally and at ever-increasing rates, a common combination among multi-baggers.
In summary, VERBIO Vereinigte BioEnergie has proven that it can reinvest in the business and generate higher returns on this capital employed, which is great. And a remarkable total return of 409% over the past five years tells us that investors expect more good things to come. That being said, we still think the promising fundamentals mean the company merits further due diligence.
If you want to know some of the risks that VERBIO Vereinigte BioEnergie faces, we have found 2 warning signs (1 is a little unpleasant!) which you should be aware of before investing here.
If you want to see other businesses earning high returns, check out our free list of companies earning high returns with strong balance sheets here.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.