Shareholders Would Enjoy A Repeat Of D & O Green Technologies Berhad's (KLSE:D&O) Recent Growth In Returns

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Speaking of which, we noticed some great changes in D & O Green Technologies Berhad's (KLSE:D&O) returns on capital, so let's have a look.

Return On Capital Employed (ROCE): What is it?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for D & O Green Technologies Berhad:

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

0.30 = RM170m ÷ (RM871m - RM305m) (Based on the trailing twelve months to June 2021).

Therefore, D & O Green Technologies Berhad has an ROCE of 30%. In absolute terms that's a great return and it's even better than the Semiconductor industry average of 15%.

See our latest analysis for D & O Green Technologies Berhad

Above you can see how the current ROCE for D & O Green Technologies Berhad compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free report for D & O Green Technologies Berhad.

The Trend Of ROCE

We like the trends that we're seeing from D & O Green Technologies Berhad. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 30%. Basically the business is earning more per dollar of capital invested and in addition to that, 108% more capital is being employed now too. So we're very much inspired by what we're seeing at D & O Green Technologies Berhad thanks to its ability to profitably reinvest capital.

The Bottom Line On D & O Green Technologies Berhad's ROCE

All in all, it's terrific to see that D & O Green Technologies Berhad is reaping the rewards from prior investments and is growing its capital base. And a remarkable 1,884% total return over the last five years tells us that investors are expecting more good things to come in the future. 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.

If you'd like to know about the risks facing D & O Green Technologies Berhad, we've discovered 1 warning sign that you should be aware of.

D & O Green Technologies Berhad 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.

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.

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