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Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So, when we ran our eye over Concurrent Technologies' (LON:CNC) trend of ROCE, we liked what we saw.
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. To calculate this metric for Concurrent Technologies, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.13 = UK£5.3m ÷ (UK£46m - UK£5.4m) (Based on the trailing twelve months to June 2024).
Thus, Concurrent Technologies has an ROCE of 13%. That's a pretty standard return and it's in line with the industry average of 13%.
See our latest analysis for Concurrent Technologies
Above you can see how the current ROCE for Concurrent Technologies compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Concurrent Technologies .
What Can We Tell From Concurrent Technologies' ROCE Trend?
While the current returns on capital are decent, they haven't changed much. The company has employed 76% more capital in the last five years, and the returns on that capital have remained stable at 13%. Since 13% is a moderate ROCE though, it's good to see a business can continue to reinvest at these decent rates of return. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.
Our Take On Concurrent Technologies' ROCE
In the end, Concurrent Technologies has proven its ability to adequately reinvest capital at good rates of return. And long term investors would be thrilled with the 119% return they've received over the last five years. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.
Concurrent Technologies could be trading at an attractive price in other respects, so you might find our free intrinsic value estimation for CNC on our platform quite valuable.