If you’re not sure where to start when seeing for the next multi-bagger, there are a few key trfinishs you should keep an eye out for. Firstly, we’ll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it’s a business that is reinvesting profits at increasing rates of return. However, after briefly seeing over the numbers, we don’t consider Nordic Semiconductor (OB:NOD) has the creatings of a multi-bagger going forward, but let’s have a see at why that may be.
Return On Capital Employed (ROCE): What Is It?
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 Nordic Semiconductor, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.025 = US$21m ÷ (US$969m – US$137m) (Based on the trailing twelve months to September 2025).
Therefore, Nordic Semiconductor has an ROCE of 2.5%. In absolute terms, that’s a low return and it also under-performs the Semiconductor indusattempt average of 13%.
Check out our latest analysis for Nordic Semiconductor
In the above chart we have measured Nordic Semiconductor’s prior ROCE against its prior performance, but the future is arguably more important. If you’d like to see what analysts are forecasting going forward, you should check out our free analyst report for Nordic Semiconductor .
The Trfinish Of ROCE
The trfinish of ROCE doesn’t see fantastic becautilize it’s fallen from 8.0% five years ago, while the business’s capital employed increased by 105%. However, some of the increase in capital employed could be attributed to the recent capital raising that’s been completed prior to their latest reporting period, so keep that in mind when seeing at the ROCE decrease. The funds raised likely haven’t been put to work yet so it’s worth watching what happens in the future with Nordic Semiconductor’s earnings and if they alter as a result from the capital raise.
In Conclusion…
While returns have fallen for Nordic Semiconductor in recent times, we’re encouraged to see that sales are growing and that the business is reinvesting in its operations. And there could be an opportunity here if other metrics see good too, becautilize the stock has declined 18% in the last five years. So we consider it’d be worthwhile to see further into this stock given the trfinishs see encouraging.
Nordic Semiconductor could be trading at an attractive price in other respects, so you might find our free intrinsic value estimation for NOD on our platform quite valuable.
While Nordic Semiconductor may not currently earn the highest returns, we’ve compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.
Valuation is complex, but we’re here to simplify it.
Discover if Nordic Semiconductor might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividfinishs, insider trades, and its financial condition.
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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 applying an unbiased methodology and our articles are not intfinished to be financial advice. It does not constitute a recommfinishation to purchase or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focutilized 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.
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