If you’re not sure where to start when searching for your next multi-bagger, there are a few key trends to keep an eye on. return Return on invested capital (ROCE) is increasing, and secondly, base 100% of invested capital. This shows that the company is a compound interest machine and can continually reinvest earnings back into the business to generate higher returns. Speaking of which, we’ve noticed some big changes. Arbopetro Energy’s Let’s take a look at (CVE:ALV)’s return on capital.
What is Return on Invested Capital (ROCE)?
For those unfamiliar, ROCE is a metric that assesses how much pre-tax profit (as a percentage) a company earns on the capital invested in its business: Analysts use the following formula to calculate Alvopetro Energy’s ROCE:
Return on Invested Capital = Earnings Before Interest and Taxes (EBIT) ÷ (Total Assets – Current Liabilities)
0.24 = US$23 million ÷ (US$106 million – US$9.1 million) (Based on the trailing 12 months ending March 2024).
So, Alvopetro Energy has an ROCE of 24%. In absolute terms, this is an excellent return and better than the oil and gas industry average of 8.7%.
Check out our latest analysis for Alvopetro Energy
In the chart above you can see how ArboPetroEnergy’s current ROCE compares to its historical return on capital, but the history can only tell you so much. If you’re interested, you can check out analyst forecasts on our free Alvopetro Energy analyst report.
What can Alvopetro Energy’s ROCE trend tell us?
ArvoPetro Energy recently turned profitable, and past investments appear to be paying off. The company was in the red five years ago, but is now profitable at 24%, which is impressive. And not surprisingly, like most companies looking to turn a profit, ArvoPetro Energy has 59% more capital deployed than it did five years ago, suggesting the company has plenty of opportunities for reinvestment that could generate higher returns.
The conclusion is…
To the delight of many shareholders, ArboPetro Energy has achieved profitability, and the company’s share price has performed very well over the past five years, a pattern that investors have taken into consideration. As such, with the company’s share price proving to be on a promising trend, it is worth investigating the company further to see if this trend will continue.
But that’s a different story. 2 warning signs for ArboPetroEnergy You probably want to know.
If you’re looking for more stocks with high returns, check this out. free A list of stocks with strong balance sheets and high return on equity.
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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
