What are the first trends to look for to identify a title that could multiply over the long term? In a perfect world, we would like a business to invest more capital in their business, and ideally the returns from that capital increase as well. This shows us that it is a composing machine, capable of continually reinvesting its profits in the business and generating higher returns. So on that note, niiio financial group (ETR: NIIN) looks pretty promising when it comes to its ROI trends.
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 niiio financial group:
Return on capital employed = Profit before interest and taxes (EBIT) ÷ (Total assets – Current liabilities)
0.0095 = 167 K € ÷ (18 M € – 713 K €) (Based on the last twelve months up to June 2021).
So, niiio finance group posted a ROCE of 0.9%. In absolute terms, this is a low return and it is also below the IT industry average of 10%.
Check out our latest analysis for niiio financial group
Historical performance is a great place to start when looking for a stock. So above you can see the gauge of niiio finance group’s ROCE compared to its past performance. If you want to delve into the history of profit, income and cash flow of niiio financial group, check out these free graphics here.
What does the ROCE trend tell us for niiio financial group?
Niiio Financial Group recently broke into profitability, so its past investments appear to be paying off. Shareholders will no doubt be delighted because the company was in deficit five years ago but now generates 0.9% of its capital. Not only that, but the business is using 435% more capital than before, but that’s to be expected of a business trying to achieve profitability. We like this trend because it tells us that the company has profitable reinvestment opportunities, and if it keeps moving forward it can lead to multi-bagger performance.
The Bottom Line On the ROCE of niiio financial group
In summary, it’s great to see that niiio financial group has succeeded in breaking into profitability and continues to reinvest in its business. And with the stock having performed exceptionally well over the past five years, these trends are being taken into account by investors. In light of this, we believe it is worth taking a closer look at this stock because if niiio financial group can maintain these trends, it could have a bright future ahead of it.
If you want to know more about niiio financial group, we have spotted 4 warning signs, and 1 of them is potentially serious.
If you want to look for solid businesses with great income, check out this free list of companies with good balance sheets and impressive returns on equity.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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