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    Returns At Imperial Metals (TSE:III) Are On The Way Up

    Simply Wall St·12/28/2025 12:13:48
    語音播報

    To find a multi-bagger stock, what are the underlying trends we should look for in a business? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So when we looked at Imperial Metals (TSE:III) and its trend of ROCE, we really liked what we saw.

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    Understanding Return On Capital Employed (ROCE)

    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 Imperial Metals:

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

    0.18 = CA$271m ÷ (CA$1.8b - CA$319m) (Based on the trailing twelve months to September 2025).

    Thus, Imperial Metals has an ROCE of 18%. On its own, that's a standard return, however it's much better than the 4.5% generated by the Metals and Mining industry.

    View our latest analysis for Imperial Metals

    roce
    TSX:III Return on Capital Employed December 28th 2025

    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 Imperial Metals has performed in the past in other metrics, you can view this free graph of Imperial Metals' past earnings, revenue and cash flow.

    What Does the ROCE Trend For Imperial Metals Tell Us?

    The fact that Imperial Metals is now generating some pre-tax profits from its prior investments is very encouraging. About five years ago the company was generating losses but things have turned around because it's now earning 18% on its capital. Not only that, but the company is utilizing 43% more capital than before, but that's to be expected from a company trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

    For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. The current liabilities has increased to 18% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors. It's worth keeping an eye on this because as the percentage of current liabilities to total assets increases, some aspects of risk also increase.

    The Key Takeaway

    Long story short, we're delighted to see that Imperial Metals' reinvestment activities have paid off and the company is now profitable. And with a respectable 88% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. Therefore, we think it would be worth your time to check if these trends are going to continue.

    While Imperial Metals looks impressive, no company is worth an infinite price. The intrinsic value infographic for III helps visualize whether it is currently trading for a fair price.

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