We were very interested in the trend of high returns at Serabi Gold (Lon: SRB)

If we want to find a stock that could multiply in the long term, which underlying trends should we look for? Among other things, we want to see two things; First, growth return on Capital (Roce) and secondly an expansion of the company of the company Crowd employed by capital. Simply put, these types of companies are compounding machines, which means that they are constantly investing their income. And in view of this the trends we see in which we see Serabi gold (Lon: SRB) looks very promising, so let's take a look.

If you have not yet worked with Roce, it measures the “return” (input tax gain), which generates a company from capital that is employed in his business. The formula for this calculation on Serabi Gold is:

Capital returns employed = profits before interest and taxes (EBIT) ÷ (total assets – current liabilities)

0.20 = US $ 22m ÷ ($ 127 million US $ 17 million) (Based on the following twelve months to September 2024).

Therefore, Serabi Gold has a Roce of 20%. In absolute terms, this is a great return and it is even better than the metals and the mining industry on average 8.3%.

Take a look at our latest analysis for Serabi Gold

Above you can see how the current Roce for Serabi Gold is comparable to its previous capital returns, but there is only as much that you can see from the past. If you want, you can cover the forecasts of the analysts, the Serabi Gold for free.

Serabi Gold shows some positive trends. In the past five years, the capital returns have increased significantly to 20%. The amount of the employed capital has also increased by 58%. So we are very inspired by what we see at Serabi Gold, thanks to its ability to reinvest the capital profitably.

In a related note, the ratio of the current liabilities by the company to the total assets fell to 13%, which essentially reduces the financing of short -term creditors or suppliers. Therefore, the shareholders would be pleased that growth in returns mainly comes from the underlying business performance.

In summary, it is great to see that Serabi-Gold can achieve returns by consistently investing the capital again to increase the return, as these are some of the most important ingredients of those who are highly asked for multi-dredging. Since the stock has returned astonishing 129% to shareholders in the past five years, it looks as if investors are recognizing these changes. Therefore, we believe that it would be worth checking whether these trends are continued.