There are a few key trends to look for if we want to identify the next multi-bagger. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at the ROCE trend of Wolters Kluwer (AMS:WKL) we really liked what we saw.

We've discovered 1 warning sign about Wolters Kluwer. View them for free.

Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Wolters Kluwer, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.25 = €1.5b ÷ (€9.5b - €3.8b) (Based on the trailing twelve months to December 2024).

Therefore, Wolters Kluwer has an ROCE of 25%. In absolute terms that's a great return and it's even better than the Professional Services industry average of 17%.

View our latest analysis for Wolters Kluwer ENXTAM:WKL Return on Capital Employed May 13th 2025

In the above chart we have measured Wolters Kluwer's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our freeanalyst report for Wolters Kluwer .

What Can We Tell From Wolters Kluwer's ROCE Trend?

Wolters Kluwer's ROCE growth is quite impressive. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 35% over the last five years. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

The Bottom Line

To sum it up, Wolters Kluwer is collecting higher returns from the same amount of capital, and that's impressive. Since the stock has returned a staggering 148% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Wolters Kluwer can keep these trends up, it could have a bright future ahead.

If you'd like to know about the risks facing Wolters Kluwer, we've discovered 1 warning sign that you should be aware of.

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If you'd like to see other companies earning high returns, check out our freelist of companies earning high returns with solid balance sheets here.

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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.

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