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Returns On Capital Signal Tricky Times Ahead For Neste Oyj (HEL:NESTE)

Simply Wall St · 2d ago

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing 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. In light of that, when we looked at Neste Oyj (HEL:NESTE) and its ROCE trend, we weren't exactly thrilled.

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What Is 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 Neste Oyj, this is the formula:

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

0.0073 = €92m ÷ (€15b - €2.9b) (Based on the trailing twelve months to September 2025).

Therefore, Neste Oyj has an ROCE of 0.7%. Ultimately, that's a low return and it under-performs the Oil and Gas industry average of 7.5%.

View our latest analysis for Neste Oyj

roce
HLSE:NESTE Return on Capital Employed January 8th 2026

Above you can see how the current ROCE for Neste Oyj compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Neste Oyj for free.

The Trend Of ROCE

When we looked at the ROCE trend at Neste Oyj, we didn't gain much confidence. Over the last five years, returns on capital have decreased to 0.7% from 23% five years ago. However it looks like Neste Oyj might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. It may take some time before the company starts to see any change in earnings from these investments.

What We Can Learn From Neste Oyj's ROCE

In summary, Neste Oyj is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. And in the last five years, the stock has given away 62% so the market doesn't look too hopeful on these trends strengthening any time soon. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.

One more thing to note, we've identified 1 warning sign with Neste Oyj and understanding it should be part of your investment process.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.