Feedback on Capital Paint A Bright Future For Organization of Football Predictions (ATH: OPAP)

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To find a multi-bagger stock, what underlying trends should we look for in a company? Typically, we will want to notice a growth trend come back on capital employed (ROCE) and at the same time, a base capital employed. This shows us that it is a compounding machine, capable of continuously reinvesting its profits back into the business and generating higher returns. And in light of that, the trends we see at Organization of Football Predictions’ (ATH:OPAP) looks very promising, so let’s take a look.

Understanding return on capital employed (ROCE)

Just to clarify if you’re not sure, ROCE is a measure of the pre-tax income (as a percentage) that a business earns on the capital invested in its business. Analysts use this formula to calculate it for the Football Prediction Organization:

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

0.40 = €524m ÷ (€2.6bn – €1.3bn) (Based on the last twelve months to June 2022).

Thereby, Organization of Football Predictions has a ROCE of 40%. In absolute terms, this is an excellent return and is even better than the hotel industry average of 5.1%.

Discover our latest analysis for the organization of football predictions

ATSE:OPAP Return on Capital Employed September 6, 2022

Above you can see how the current ROCE for the soccer betting organization compares to its past returns on capital, but there is little you can say about the past. If you’re interested, you can check out analyst forecasts in our free analyst forecast report for the company.

What the ROCE trend can tell us

Organization of Football Prognostics ROCE growth is quite impressive. The numbers show that over the past five years, ROCE has increased by 145% while employing roughly the same amount of capital. Basically, the business generates higher returns from the same amount of capital and this is evidence that there are improvements in the efficiency of the business. On that front, things are looking good, so it’s worth exploring what management has been saying about upcoming growth plans.

By the way, we noticed that the improvement in ROCE seems to be partly fueled by an increase in current liabilities. Current liabilities have increased to 49% of total assets, so the company is now financed more by suppliers or short-term creditors. And with current liabilities at these levels, that’s pretty high.

The essentials on the organization of the ROCE of football predictions

To sum up, Organization of Football Predictions collects higher returns from the same amount of capital, and that is impressive. Given that the stock has returned 122% to shareholders over the past five years, it seems investors recognize these changes. That being said, we still think the promising fundamentals mean the company merits further due diligence.

Finally we found 2 warning signs for the organization of football predictions which we think you should be aware of.

If you want to find more stocks that have generated high returns, check out this free list of stocks with strong balance sheets that also generate 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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