Coca-Cola HBC, LON:CCH, Hasn’t Accelerated Its Returns

If we are to find the next multi-bagger, there are some key trends that we should be looking for. First, we want to see a proven track record. Return On capital employed (ROCE), which is growing, and secondly, expanding Base The amount of capital used. This indicates that the business is a compounding machine. It’s able to reinvest its earnings in the business, increasing returns. The ROCE of Coca-Cola HBC (LON:CCH) looks decent, right now, so lets see what the trend of returns can tell us.

Understanding Return On Capital Employed (ROCE)

ROCE (or Return on Capital Employed) is a measure that measures a company’s annual pre-tax profit (or its return) relative to capital. For Coca-Cola HBC, the formula for this calculation is:

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

0.14 = €902m ÷ (€10b – €4.0b) Based on the trailing twelve month to July 2022.

Thus, Coca-Cola HBC has a ROCE value of 14% This is a typical return on capital, and it’s comparable to the industry’s average returns at 14%.

Check out our latest analysis for Coca-Cola HBC

You can see above how the current ROCE at Coca-Cola HBC compares with its previous returns on equity. But, you can only tell so much from the past. The forecasts for Coca-Cola HBC can be viewed if you like. here For free.

What does the ROCE Trend for Coca-Cola HBC tell us?

The current returns on capital are good, but they have not changed much. Over the past five years, the company has earned an average of 14% and capital used within the business has increased 42% over that period. Although 14% is a low ROCE, it’s great to see businesses continue to invest at these decent rates. Although these returns are not exciting for long periods, they can be very profitable if the company is consistent in their investment.

The Key Takeaway

Remember that Coca-Cola HBC has shown its ability to reinvest at acceptable rates of return. But, shareholders haven’t seen much growth in total returns over the last five year. Smart investors might consider this stock as a prime investment.

Another thing we have spotted 2 warning signs facing Coca-Cola HBC You might find it interesting.

Coca-Cola HBC may not be earning the greatest return, but this is an interesting chart. No cost list of companies that are earning high returns on equity with solid balance sheets.

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This article is by Simply Wall St. It is general in nature. We only provide commentary on historical data and analyst projections. Our articles are not meant to be considered financial advice. This analysis does not represent a recommendation to purchase or sell any stock and it does not consider your financial goals or financial situation. Our aim is to give you long-term focused analysis that is based on fundamental data. Our analysis may not take into account the most recent price-sensitive company announcements and qualitative material. Simply Wall St holds no position in any of the stocks mentioned.

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