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. This shows us that it’s a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. However, after investigating Ibotta (NYSE:IBTA), we don’t think it’s current trends fit the mold of a multi-bagger.
Just to clarify if you’re unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Ibotta is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.087 = US$35m ÷ (US$601m – US$204m) (Based on the trailing twelve months to June 2025).
Therefore, Ibotta has an ROCE of 8.7%. Even though it’s in line with the industry average of 9.5%, it’s still a low return by itself.
View our latest analysis for Ibotta
In the above chart we have measured Ibotta’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 free analyst report for Ibotta .
In terms of Ibotta’s historical ROCE trend, it doesn’t exactly demand attention. The company has consistently earned 8.7% for the last two years, and the capital employed within the business has risen 361% in that time. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don’t provide a high return on capital.
On a side note, Ibotta has done well to reduce current liabilities to 34% of total assets over the last two years. This can eliminate some of the risks inherent in the operations because the business has less outstanding obligations to their suppliers and or short-term creditors than they did previously.
In conclusion, Ibotta has been investing more capital into the business, but returns on that capital haven’t increased. And in the last year, the stock has given away 56% so the market doesn’t look too hopeful on these trends strengthening any time soon. In any case, the stock doesn’t have these traits of a multi-bagger discussed above, so if that’s what you’re looking for, we think you’d have more luck elsewhere.
