These Return Metrics Don't Make Organización Soriana S. A. B. de C. V (BMV:SORIANAB) Look Too Strong

When it comes to investing, there are some useful financial metrics that can warn us when a business is potentially in trouble. More often than not, we'll see a declining return on capital employed (ROCE) and a declining amount of capital employed. This indicates to us that the business is not only shrinking the size of its net assets, but its returns are falling as well. So after glancing at the trends within Organización Soriana S. A. B. de C. V (BMV:SORIANAB), we weren't too hopeful.

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

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Organización Soriana S. A. B. de C. V:

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

0.071 = Mex$8.4b ÷ (Mex$153b - Mex$35b) (Based on the trailing twelve months to March 2025).

Thus, Organización Soriana S. A. B. de C. V has an ROCE of 7.1%. Ultimately, that's a low return and it under-performs the Consumer Retailing industry average of 18%.

See our latest analysis for Organización Soriana S. A. B. de C. V

In the above chart we have measured Organización Soriana S. A. B. de C. V's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Organización Soriana S. A. B. de C. V for free.

What Can We Tell From Organización Soriana S. A. B. de C. V's ROCE Trend?

In terms of Organización Soriana S. A. B. de C. V's historical ROCE movements, the trend doesn't inspire confidence. To be more specific, the ROCE was 9.5% five years ago, but since then it has dropped noticeably. On top of that, it's worth noting that the amount of capital employed within the business has remained relatively steady. This combination can be indicative of a mature business that still has areas to deploy capital, but the returns received aren't as high due potentially to new competition or smaller margins. If these trends continue, we wouldn't expect Organización Soriana S. A. B. de C. V to turn into a multi-bagger.

Our Take On Organización Soriana S. A. B. de C. V's ROCE

In summary, it's unfortunate that Organización Soriana S. A. B. de C. V is generating lower returns from the same amount of capital. Yet despite these concerning fundamentals, the stock has performed strongly with a 61% return over the last five years, so investors appear very optimistic. In any case, the current underlying trends don't bode well for long term performance so unless they reverse, we'd start looking elsewhere.

Organización Soriana S. A. B. de C. V could be trading at an attractive price in other respects, so you might find our free intrinsic value estimation for SORIANA B on our platform quite valuable.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.