MClean Technologies Berhad (KLSE:MCLEAN) Is Looking To Continue Growing Its Returns On Capital

Explore MClean Technologies Berhad's Fair Values from the Community and select yours

What trends should we look for it we want to identify stocks that can multiply in value over the long term? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount 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, we've noticed some promising trends at MClean Technologies Berhad (KLSE:MCLEAN) so let's look a bit deeper.

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Return On Capital Employed (ROCE): What Is It?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on MClean Technologies Berhad is:

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

0.091 = RM4.8m ÷ (RM69m - RM17m) (Based on the trailing twelve months to March 2025).

Thus, MClean Technologies Berhad has an ROCE of 9.1%. In absolute terms, that's a low return, but it's much better than the Commercial Services industry average of 7.1%.

See our latest analysis for MClean Technologies Berhad

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of MClean Technologies Berhad.

What Can We Tell From MClean Technologies Berhad's ROCE Trend?

The fact that MClean Technologies Berhad is now generating some pre-tax profits from its prior investments is very encouraging. The company was generating losses five years ago, but now it's earning 9.1% which is a sight for sore eyes. In addition to that, MClean Technologies Berhad is employing 31% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

What We Can Learn From MClean Technologies Berhad's ROCE

In summary, it's great to see that MClean Technologies Berhad has managed to break into profitability and is continuing to reinvest in its business. Since the stock has returned a solid 70% to shareholders over the last five years, it's fair to say investors are beginning to recognize these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

On a final note, we've found 3 warning signs for MClean Technologies Berhad that we think you should be aware of.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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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.