Capital returns from the Greek Football Predictions Organization (ATH:OPAP) paint a worrying picture

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If we want to find a potential multi-bagger, there are often underlying trends that can provide clues. Ideally, a business will show two trends; first growth to return to on capital employed (ROCE) and on the other hand, growth amount capital employed. If you see this, it usually means it’s a company with a great business model and lots of profitable reinvestment opportunities. That said, at a first glance at Greek Football Prediction Organization (ATH:OPAP) we’re not jumping off our chairs on the yield trend, but taking a closer look.

What is return on capital employed (ROCE)?

If you’ve never worked with ROCE before, it measures the “yield” (pre-tax profit) a company generates from the capital used in its business. Analysts use this formula to calculate it for the Greek Football Prediction Organization:

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

0.15 = €303m ÷ (€2.6bn – €532m) (Based on the last twelve months to September 2021).

Thereby, The Greek Football Prediction Organization has a ROCE of 15%. In itself, this is a standard return, but it is much better than the 5.2% generated by the hotel industry.

See our latest analysis for the Greek Football Predictions Organization

ATSE:OPAP Return on Capital Employed February 21, 2022

In the graph above, we have measured the Greek Football Prediction Organization’s past ROCE against its past performance, but arguably more important is the future. If you’re interested, you can check out analyst forecasts in our free analyst forecast report for the company.

What does the ROCE trend tell us for the Greek organization of football predictions?

On the surface, the tendency of ROCE to the Greek Football Prediction Organization does not inspire confidence. To be more specific, ROCE has fallen by 20% over the past five years. However, it looks like the Greek Football Prediction Organization could reinvest for long-term growth because while the capital employed has increased, the company’s sales haven’t changed much over the last 12 months. It’s worth keeping an eye on the company’s earnings going forward to see if those investments end up contributing to the bottom line.

What we can learn from the Greek Football Predictions Organization ROCE

In summary, while we are somewhat encouraged by the reinvestment of the Greek Football Prediction Organization in its own business, we are aware that returns are diminishing. Investors must think there are better things to come because the stock knocked it out of the park, delivering a 153% gain to shareholders who have held it over the past five years. But if the trajectory of these underlying trends continues, we think the likelihood of it being a multi-bagger from here is not high.

One more thing to note, we have identified 4 warning signs with the Greek Football Predictions Organization and understanding them should be part of your investment process.

For those who like to invest in solid companies, look at this free list of companies with strong balance sheets and high returns on equity.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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