Returns On Capital Are Showing Encouraging Signs At Atresmedia Corporación de Medios de Comunicación (BME:A3M)

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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 Atresmedia Corporación de Medios de Comunicación (BME:A3M) and its trend of ROCE, we really liked what we saw.

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What Is 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. To calculate this metric for Atresmedia Corporación de Medios de Comunicación, this is the formula:

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

0.18 = €155m ÷ (€1.4b - €559m) (Based on the trailing twelve months to June 2025).

Thus, Atresmedia Corporación de Medios de Comunicación has an ROCE of 18%. In absolute terms, that's a satisfactory return, but compared to the Media industry average of 11% it's much better.

See our latest analysis for Atresmedia Corporación de Medios de Comunicación

In the above chart we have measured Atresmedia Corporación de Medios de Comunicación's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Atresmedia Corporación de Medios de Comunicación for free.

What Does the ROCE Trend For Atresmedia Corporación de Medios de Comunicación Tell Us?

Atresmedia Corporación de Medios de Comunicación has not disappointed with their ROCE growth. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 41% over the last five years. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.

The Key Takeaway

To bring it all together, Atresmedia Corporación de Medios de Comunicación has done well to increase the returns it's generating from its capital employed. 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.

If you want to know some of the risks facing Atresmedia Corporación de Medios de Comunicación we've found 2 warning signs (1 is significant!) that you should be aware of before investing here.

While Atresmedia Corporación de Medios de Comunicación 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.