Yahoo Finance Bijou Brigitte modische Accessoires (ETR:BIJ) Has Some Way To Go To Become A Multi-Bagger
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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So, when we ran our eye over Bijou Brigitte modische Accessoires' (ETR:BIJ) trend of ROCE, we liked what we saw.
Return On Capital Employed (ROCE): What Is It?
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. Analysts use this formula to calculate it for Bijou Brigitte modische Accessoires:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.16 = €49m ÷ (€364m - €65m) (Based on the trailing twelve months to June 2023).
Therefore, Bijou Brigitte modische Accessoires has an ROCE of 16%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Luxury industry average of 15%.
Check out our latest analysis for Bijou Brigitte modische Accessoires
While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you're interested in investigating Bijou Brigitte modische Accessoires' past further, check out this free graph of past earnings, revenue and cash flow.
What The Trend Of ROCE Can Tell Us
While the returns on capital are good, they haven't moved much. The company has consistently earned 16% for the last five years, and the capital employed within the business has risen 33% in that time. Since 16% 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.
What We Can Learn From Bijou Brigitte modische Accessoires' ROCE
The main thing to remember is that Bijou Brigitte modische Accessoires has proven its ability to continually reinvest at respectable rates of return. In light of this, the stock has only gained 31% over the last five years for shareholders who have owned the stock in this period. So to determine if Bijou Brigitte modische Accessoires is a multi-bagger going forward, we'd suggest digging deeper into the company's other fundamentals.
One more thing, we've spotted 2 warning signs facing Bijou Brigitte modische Accessoires that you might find interesting.
If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.
