Returns Are Gaining Momentum At Carlo Rino Group Berhad (KLSE:CARLORINO)

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Speaking of which, we noticed some great changes in Carlo Rino Group Berhad's (KLSE:CARLORINO) returns on capital, so let's have a look.

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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. The formula for this calculation on Carlo Rino Group Berhad is:

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

0.12 = RM22m ÷ (RM194m - RM14m) (Based on the trailing twelve months to June 2025).

Thus, Carlo Rino Group Berhad has an ROCE of 12%. In absolute terms, that's a satisfactory return, but compared to the Specialty Retail industry average of 8.8% it's much better.

See our latest analysis for Carlo Rino Group Berhad

Historical performance is a great place to start when researching a stock so above you can see the gauge for Carlo Rino Group Berhad's ROCE against it's prior returns. If you'd like to look at how Carlo Rino Group Berhad has performed in the past in other metrics, you can view this free graph of Carlo Rino Group Berhad's past earnings, revenue and cash flow.

What Does the ROCE Trend For Carlo Rino Group Berhad Tell Us?

Carlo Rino Group Berhad is displaying some positive trends. The data shows that returns on capital have increased substantially over the last five years to 12%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 93%. So we're very much inspired by what we're seeing at Carlo Rino Group Berhad thanks to its ability to profitably reinvest capital.

The Bottom Line On Carlo Rino Group Berhad's ROCE

In summary, it's great to see that Carlo Rino Group Berhad can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. Since the stock has returned a staggering 212% to shareholders over the last five years, it looks like investors are recognizing these changes. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

Carlo Rino Group Berhad does have some risks though, and we've spotted 3 warning signs for Carlo Rino Group Berhad that you might be interested in.

While Carlo Rino Group 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.