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    Here's What's Concerning About Monbat AD's (BUL:MONB) Returns On Capital

    Simply Wall St·01/02/2026 04:31:45
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    If you're looking at a mature business that's past the growth phase, what are some of the underlying trends that pop up? Businesses in decline often have two underlying trends, firstly, a declining return on capital employed (ROCE) and a declining base of capital employed. This combination can tell you that not only is the company investing less, it's earning less on what it does invest. So after glancing at the trends within Monbat AD (BUL:MONB), 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 Monbat AD:

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

    0.038 = лв10m ÷ (лв467m - лв192m) (Based on the trailing twelve months to September 2025).

    So, Monbat AD has an ROCE of 3.8%. In absolute terms, that's a low return and it also under-performs the Electrical industry average of 13%.

    Check out our latest analysis for Monbat AD

    roce
    BUL:MONB Return on Capital Employed January 2nd 2026

    While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Monbat AD has performed in the past in other metrics, you can view this free graph of Monbat AD's past earnings, revenue and cash flow.

    The Trend Of ROCE

    We are a bit worried about the trend of returns on capital at Monbat AD. To be more specific, the ROCE was 5.6% 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. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on Monbat AD becoming one if things continue as they have.

    On a side note, Monbat AD's current liabilities are still rather high at 41% of total assets. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

    The Bottom Line On Monbat AD's ROCE

    In the end, the trend of lower returns on the same amount of capital isn't typically an indication that we're looking at a growth stock. Unsurprisingly then, the stock has dived 73% over the last five years, so investors are recognizing these changes and don't like the company's prospects. Unless there is a shift to a more positive trajectory in these metrics, we would look elsewhere.

    One more thing: We've identified 4 warning signs with Monbat AD (at least 3 which make us uncomfortable) , and understanding these would certainly be useful.

    While Monbat AD 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.