Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, AleAnna( NASDAQ:ANNA ) looks quite promising in regards to its trends of return on capital.
Return On Capital Employed (ROCE): What Is It?
If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on AleAnna is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.013 = US$1.1m ÷ (US$100m - US$18m) (Based on the trailing twelve months to September 2025) .
Therefore, AleAnna has an ROCE of 1.3%.In absolute terms, that's a low return and it also under-performs the Renewable Energy industry average of 4.3%.
Check out our latest analysis for AleAnna
Historical performance is a great place to start when researching a stock so above you can see the gauge for AleAnna's ROCE against it's prior returns. If you'd like to look at how AleAnna has performed in the past in other metrics, you can view this free graph of AleAnna's past earnings, revenue and cash flow .
The Trend Of ROCE
The fact that AleAnna is now generating some pre-tax profits from its prior investments is very encouraging. Shareholders would no doubt be pleased with this because the business was loss-making two years ago but is is now generating 1.3% on its capital. Not only that, but the company is utilizing 197% more capital than before, but that's to be expected from a company trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.
For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. The current liabilities has increased to 18% of total assets, so the business is now more funded by the likes of its suppliers or short-term creditors. Keep an eye out for future increases because when the ratio of current liabilities to total assets gets particularly high, this can introduce some new risks for the business.
The Bottom Line
Long story short, we're delighted to see that AleAnna's reinvestment activities have paid off and the company is now profitable. Astute investors may have an opportunity here because the stock has declined 67% in the last three years. That being the case, research into the company's current valuation metrics and future prospects seems fitting.
On a separate note, we've found 1 warning sign for AleAnna you'll probably want to know about.
While AleAnna isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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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 using an unbiased methodology and our articles are not intended to be financial advice.
It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused 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.
