Key Trends to Look for in Finding the Next Multi-Bagger: Analyzing Wolters Kluwer’s ROCE Trend
Are you looking to invest in the next big winner in the stock market? If so, you’ll want to pay attention to key trends that can help you identify potential multi-baggers. One important trend to look out for is a company’s Return on Capital Employed (ROCE). This metric measures how efficiently a company is using its capital to generate profits.
In a recent analysis of Wolters Kluwer (AMS:WKL), we found that the company has an impressive ROCE of 25%, which is well above the industry average of 15%. This indicates that Wolters Kluwer is a compounding machine, continually reinvesting its earnings at high rates of return.
But what exactly is ROCE and why is it important? ROCE is a measure of how much pre-tax income a company earns on the capital invested in its business. In the case of Wolters Kluwer, the company has been able to increase its ROCE by 50% over the last five years, while keeping its capital employed relatively flat. This suggests that Wolters Kluwer has become more efficient in generating higher returns without needing to make additional investments.
However, it’s important to note that Wolters Kluwer still has relatively high current liabilities, which could pose some risks in the future. Despite this, the company’s strong performance over the last five years has led to a remarkable 160% total return for investors.
In conclusion, Wolters Kluwer’s promising trends and strong performance make it a company worth researching further for potential investment opportunities. Keep an eye on how the company continues to manage its capital and generate returns in the future.
If you’re interested in finding more stocks with high returns on equity and solid balance sheets, be sure to check out our free list of recommended stocks. And remember, investing in the stock market involves risks, so always do your own research and consider seeking professional advice before making any investment decisions.
What are your thoughts on Wolters Kluwer’s performance and ROCE trend? Share your feedback with us or reach out to the editorial team at Simply Wall St for more information. Happy investing!
