Reasons We Appreciate the Returns at Brambles (ASX:BXB)

April 09, 2025 10:33 AM AEST | By Team Kalkine Media

Reasons We Appreciate the Returns at Brambles (ASX:BXB) — Image source: Shutterstock

Understanding ROCE

Return on Capital Employed (ROCE) is a key metric used to evaluate the efficiency of a company in generating profits from its capital. For Brambles, the calculation is:

ROCE = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
With an ROCE of 21%, Brambles has outperformed the industry average of 11%, marking it as a strong contender within the commercial services sector.

Brambles' ROCE Trajectory

Brambles has notably enhanced its ROCE over the past five years by 53%, without significant changes in its capital employment. This indicates improved operational efficiencies that yield higher returns and highlights the company's ability to optimize existing resources. However, sustaining this growth may require exploring diverse areas for investment to continue this upward trajectory.

Conclusion on Brambles' Performance

In summary, Brambles' impressive performance in enhancing efficiencies and achieving a robust rate of return is commendable. The company's stock performance over the past five years reflects these fundamental strengths, making it an interesting prospect for those conducting in-depth diligence. Despite the promising outlook, potential investors should be aware of certain risks identified, underscoring the need for thorough analysis.

For those interested in diving deeper into such opportunities, exploring a curated list of companies earning high returns on equity with solid balance sheets might be valuable. Additionally, valuation assessments of Brambles could provide insights into whether it remains an undervalued asset with good growth prospects.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.