Plásticos Compuestos (BME:KOM) Is Experiencing Growth In Returns On Capital

There are a few key trends to look for if we want to identify the next multi-bagger. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Plásticos Compuestos (BME:KOM) so let's look a bit deeper.

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Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Plásticos Compuestos is:

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

0.061 = €1.2m ÷ (€33m - €13m) (Based on the trailing twelve months to June 2025).

Thus, Plásticos Compuestos has an ROCE of 6.1%. Ultimately, that's a low return and it under-performs the Chemicals industry average of 10%.

View our latest analysis for Plásticos Compuestos

In the above chart we have measured Plásticos Compuestos' prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Plásticos Compuestos .

What The Trend Of ROCE Can Tell Us

You'd find it hard not to be impressed with the ROCE trend at Plásticos Compuestos. We found that the returns on capital employed over the last five years have risen by 695%. The company is now earning €0.06 per dollar of capital employed. Interestingly, the business may be becoming more efficient because it's applying 33% less capital than it was five years ago. If this trend continues, the business might be getting more efficient but it's shrinking in terms of total assets.

On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities. The current liabilities has increased to 40% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors. Keep an eye out for future increases because when the ratio of current liabilities to total assets gets particularly high, this can introduce some new risks for the business.

Our Take On Plásticos Compuestos' ROCE

In a nutshell, we're pleased to see that Plásticos Compuestos has been able to generate higher returns from less capital. Given the stock has declined 65% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. So researching this company further and determining whether or not these trends will continue seems justified.

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

While Plásticos Compuestos may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.