Capital Investments At Spinneys 1961 Holding (DFM:SPINNEYS) Point To A Promising Future

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, 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. With that in mind, the ROCE of Spinneys 1961 Holding (DFM:SPINNEYS) looks attractive right now, so lets see what the trend of returns can tell us.

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Understanding Return On Capital Employed (ROCE)

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Spinneys 1961 Holding:

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

0.33 = د.إ413m ÷ (د.إ2.2b - د.إ975m) (Based on the trailing twelve months to September 2025).

So, Spinneys 1961 Holding has an ROCE of 33%. In absolute terms that's a great return and it's even better than the Consumer Retailing industry average of 14%.

Check out our latest analysis for Spinneys 1961 Holding

In the above chart we have measured Spinneys 1961 Holding'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 Spinneys 1961 Holding .

The Trend Of ROCE

It's hard not to be impressed by Spinneys 1961 Holding's returns on capital. The company has consistently earned 33% for the last three years, and the capital employed within the business has risen 67% in that time. Returns like this are the envy of most businesses and given it has repeatedly reinvested at these rates, that's even better. If Spinneys 1961 Holding can keep this up, we'd be very optimistic about its future.

Another thing to note, Spinneys 1961 Holding has a high ratio of current liabilities to total assets of 44%. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

Our Take On Spinneys 1961 Holding's ROCE

In the end, the company has proven it can reinvest it's capital at high rates of returns, which you'll remember is a trait of a multi-bagger. However, over the last year, the stock has only delivered a 4.1% return to shareholders who held over that period. That's why it could be worth your time looking into this stock further to discover if it has more traits of a multi-bagger.

Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for SPINNEYS that compares the share price and estimated value.

Spinneys 1961 Holding is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.