Kitwave Group (LON:KITW) Fails to Impress with Returns on Capital

Kitwave Group (LON:KITW) has caught the attention of investors with its high Return on Capital Employed (ROCE) of 22%. While this is a great return, the trend of ROCE at Kitwave Group is not as inspiring as it has fallen from 28% five years ago. However, this decline could be attributed to the company’s investments in growth, which have led to a short-term reduction in ROCE.

Despite the lower returns in the short term, Kitwave Group’s commitment to reinvesting for growth has resulted in higher sales and a 161% return to shareholders in the last three years. This has left long-term investors optimistic about the stock’s performance going forward.

One key factor contributing to the decrease in ROCE is Kitwave Group’s efforts to pay down its current liabilities to 37% of total assets. While this may reduce the business’ efficiency in generating ROCE, it also reduces some elements of risk as the company is now funding more of its operations with its own money.

Overall, while the trend of ROCE at Kitwave Group may not be ideal, the company’s focus on growth and higher sales are positive indicators for long-term investors. With the stock returning significant gains to shareholders in recent years, it is definitely worth keeping an eye on Kitwave Group for potential future growth opportunities.