Investors Could Be Concerned With Storskogen Group's (STO:STOR B) Returns On Capital

Simply Wall St · 03/11 05:20

There are a few key trends to look for if we want to identify the next multi-bagger. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Although, when we looked at Storskogen Group (STO:STOR B), it didn't seem to tick all of these boxes.

Understanding 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 Storskogen Group, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.044 = kr1.5b ÷ (kr43b - kr9.5b) (Based on the trailing twelve months to December 2024).

So, Storskogen Group has an ROCE of 4.4%. Ultimately, that's a low return and it under-performs the Industrials industry average of 9.5%.

Check out our latest analysis for Storskogen Group

roce
OM:STOR B Return on Capital Employed March 11th 2025

Above you can see how the current ROCE for Storskogen Group compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Storskogen Group .

What Can We Tell From Storskogen Group's ROCE Trend?

In terms of Storskogen Group's historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 6.3% over the last five years. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It may take some time before the company starts to see any change in earnings from these investments.

What We Can Learn From Storskogen Group's ROCE

To conclude, we've found that Storskogen Group is reinvesting in the business, but returns have been falling. And investors appear hesitant that the trends will pick up because the stock has fallen 44% in the last three years. In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere.

If you're still interested in Storskogen Group it's worth checking out our FREE intrinsic value approximation for STOR B to see if it's trading at an attractive price in other respects.

While Storskogen Group may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.