Return Trends At PLS Plantations Berhad (KLSE:PLS) Aren't Appealing

To find a multi-bagger stock, what are the underlying trends we should look for in a business? 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. In light of that, when we looked at PLS Plantations Berhad (KLSE:PLS) and its ROCE trend, we weren't exactly thrilled.

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Understanding Return On Capital Employed (ROCE)

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. To calculate this metric for PLS Plantations Berhad, this is the formula:

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

0.024 = RM9.8m ÷ (RM471m - RM55m) (Based on the trailing twelve months to June 2025).

Thus, PLS Plantations Berhad has an ROCE of 2.4%. In absolute terms, that's a low return and it also under-performs the Food industry average of 9.7%.

View our latest analysis for PLS Plantations Berhad

Historical performance is a great place to start when researching a stock so above you can see the gauge for PLS Plantations Berhad's ROCE against it's prior returns. If you're interested in investigating PLS Plantations Berhad's past further, check out this free graph covering PLS Plantations Berhad's past earnings, revenue and cash flow.

What Can We Tell From PLS Plantations Berhad's ROCE Trend?

There hasn't been much to report for PLS Plantations Berhad's returns and its level of capital employed because both metrics have been steady for the past five years. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So don't be surprised if PLS Plantations Berhad doesn't end up being a multi-bagger in a few years time.

The Key Takeaway

In summary, PLS Plantations Berhad isn't compounding its earnings but is generating stable returns on the same amount of capital employed. And investors appear hesitant that the trends will pick up because the stock has fallen 63% in the last five years. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.

One final note, you should learn about the 2 warning signs we've spotted with PLS Plantations Berhad (including 1 which is a bit concerning) .

While PLS Plantations Berhad may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list 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.