Returns At Naturgy Chile Gas Natural (SNSE:NTGCLGAS) Are On The Way Up

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at Naturgy Chile Gas Natural (SNSE:NTGCLGAS) so let's look a bit deeper.

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What Is Return On Capital Employed (ROCE)?

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. To calculate this metric for Naturgy Chile Gas Natural, this is the formula:

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

0.12 = CL$312b ÷ (CL$3.0t - CL$386b) (Based on the trailing twelve months to September 2025).

So, Naturgy Chile Gas Natural has an ROCE of 12%. That's a relatively normal return on capital, and it's around the 15% generated by the Gas Utilities industry.

Check out our latest analysis for Naturgy Chile Gas Natural

Historical performance is a great place to start when researching a stock so above you can see the gauge for Naturgy Chile Gas Natural's ROCE against it's prior returns. If you'd like to look at how Naturgy Chile Gas Natural has performed in the past in other metrics, you can view this free graph of Naturgy Chile Gas Natural's past earnings, revenue and cash flow.

How Are Returns Trending?

Investors would be pleased with what's happening at Naturgy Chile Gas Natural. The data shows that returns on capital have increased substantially over the last five years to 12%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 24%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

What We Can Learn From Naturgy Chile Gas Natural's ROCE

In summary, it's great to see that Naturgy Chile Gas Natural can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 2 warning signs for Naturgy Chile Gas Natural (of which 1 is significant!) that you should know about.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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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.