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 on that note, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien (ETR:BVB) looks quite promising in regards to its trends of return on capital.

Return On Capital Employed (ROCE): What Is It?

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 Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien, this is the formula:

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

0.13 = €51m ÷ (€590m - €183m) (Based on the trailing twelve months to June 2024).

Therefore, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien has an ROCE of 13%. That's a pretty standard return and it's in line with the industry average of 13%.

View our latest analysis for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien

Above you can see how the current ROCE for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien .

How Are Returns Trending?

Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien has not disappointed with their ROCE growth. The figures show that over the last five years, ROCE has grown 50% 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.

What We Can Learn From Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's ROCE

To sum it up, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien is collecting higher returns from the same amount of capital, and that's impressive. Astute investors may have an opportunity here because the stock has declined 60% in the last five years. That being the case, research into the company's current valuation metrics and future prospects seems fitting.