Returns On Capital At Hamburger Hafen und Logistik (ETR:HHFA) Have Hit The Brakes

Did you know there are some financial metrics that can provide clues of a potential 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. However, after briefly looking over the numbers, we don't think Hamburger Hafen und Logistik (ETR:HHFA) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Hamburger Hafen und Logistik is:

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

0.053 = €158m ÷ (€3.6b - €557m) (Based on the trailing twelve months to September 2025).

Therefore, Hamburger Hafen und Logistik has an ROCE of 5.3%. In absolute terms, that's a low return and it also under-performs the Infrastructure industry average of 9.1%.

View our latest analysis for Hamburger Hafen und Logistik

Historical performance is a great place to start when researching a stock so above you can see the gauge for Hamburger Hafen und Logistik's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Hamburger Hafen und Logistik.

What The Trend Of ROCE Can Tell Us

The returns on capital haven't changed much for Hamburger Hafen und Logistik in recent years. Over the past five years, ROCE has remained relatively flat at around 5.3% and the business has deployed 31% more capital into its operations. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

The Bottom Line

Long story short, while Hamburger Hafen und Logistik has been reinvesting its capital, the returns that it's generating haven't increased. Since the stock has gained an impressive 45% over the last five years, investors must think there's better things to come. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

On a final note, we've found 2 warning signs for Hamburger Hafen und Logistik that we think you should be aware of.

While Hamburger Hafen und Logistik isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.