Investors Met With Slowing Returns on Capital At Platform Group (ETR:TPG)

Ladies and gentlemen, buckle up! We're diving into the world of Platform Group (ETR:TPG), a company that's been a darling of the market for its consistent returns on capital employed (ROCE). But hold onto your hats, because the winds of change are blowing, and investors are starting to feel the chill.



For the past five years, Platform Group has been a rock star, maintaining an 18% ROCE. That's a solid return, especially when you compare it to the Specialty Retail industry average of 9.0%. But here's the kicker: while the returns have been stable, the capital employed within the business has skyrocketed by 582%. That's right, folks! The company has been reinvesting capital at a breakneck pace, but the returns haven't moved much. It's like driving a car at full speed but not going anywhere.

Now, let's talk about the elephant in the room. Platform Group has a current liabilities to total assets ratio of 45%. That's a pretty high number, and it means the company is relying heavily on short-term creditors. While this can be a risky strategy, it also shows that Platform Group is leveraging financial resources for growth. But is it sustainable? That's the million-dollar question.

So, what's the plan? Platform Group needs to find ways to boost its ROCE and capital employed trends. One way to do this is through strategic acquisitions. The company has already shown a pattern of acquiring stakes in various companies, such as Finone GmbH, Herbertz GmbH, and Lyra Pet GmbH. These acquisitions not only expand the company's market reach but also provide opportunities for synergies and cost efficiencies. But will it be enough to keep the momentum going?

Investors, you need to stay vigilant. Platform Group's consistent reinvestment at decent rates of return has been a boon, but the slowing returns on capital are a red flag. The company needs to find new ways to grow and innovate, or it risks falling behind. So, keep your eyes on the prize, and don't be afraid to ask the tough questions. After all, your money is on the line, and you deserve to know the truth.

In conclusion, Platform Group has been a solid performer, but the slowing returns on capital are a cause for concern. The company needs to find new ways to grow and innovate, or it risks falling behind. So, stay tuned, folks, because the story of Platform Group is far from over.