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There's Been No Shortage Of Growth Recently For Safilo Group's (BIT:SFL) Returns On Capital

Simply Wall St · 06/18 04:21

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, Safilo Group (BIT:SFL) looks quite promising in regards to its trends of return on capital.

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What Is Return On Capital Employed (ROCE)?

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. To calculate this metric for Safilo Group, this is the formula:

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

0.085 = €48m ÷ (€842m - €277m) (Based on the trailing twelve months to December 2024).

So, Safilo Group has an ROCE of 8.5%. Even though it's in line with the industry average of 9.3%, it's still a low return by itself.

See our latest analysis for Safilo Group

roce
BIT:SFL Return on Capital Employed June 18th 2025

Above you can see how the current ROCE for Safilo 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 Safilo Group .

So How Is Safilo Group's ROCE Trending?

Safilo Group is showing promise given that its ROCE is trending up and to the right. The figures show that over the last five years, ROCE has grown 1,123% whilst employing roughly the same amount of capital. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

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What We Can Learn From Safilo Group's ROCE

In summary, we're delighted to see that Safilo Group has been able to increase efficiencies and earn higher rates of return on the same amount of capital. Since the stock has only returned 15% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So with that in mind, we think the stock deserves further research.

If you want to continue researching Safilo Group, you might be interested to know about the 1 warning sign that our analysis has discovered.

While Safilo 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.