Explore Villars Holding's Fair Values from the Community and select yours
There are a few key trends to look for if we want to identify the next multi-bagger. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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. So when we looked at Villars Holding (VTX:VILN) and its trend of ROCE, we really liked what we saw.
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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 Villars Holding is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.031 = CHF4.2m ÷ (CHF142m - CHF8.1m) (Based on the trailing twelve months to December 2024).
So, Villars Holding has an ROCE of 3.1%. In absolute terms, that's a low return and it also under-performs the Consumer Retailing industry average of 12%.
View our latest analysis for Villars Holding
Historical performance is a great place to start when researching a stock so above you can see the gauge for Villars Holding's ROCE against it's prior returns. If you'd like to look at how Villars Holding has performed in the past in other metrics, you can view this free graph of Villars Holding's past earnings, revenue and cash flow.
We're glad to see that ROCE is heading in the right direction, even if it is still low at the moment. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 3.1%. 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 31%. So we're very much inspired by what we're seeing at Villars Holding thanks to its ability to profitably reinvest capital.
In summary, it's great to see that Villars Holding 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. Astute investors may have an opportunity here because the stock has declined 11% in the last five years. With that in mind, we believe the promising trends warrant this stock for further investigation.