We Think D & O Green Technologies Berhad (KLSE:D&O) Might Have The DNA Of A Multi-Bagger

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at the ROCE trend of D & O Green Technologies Berhad (KLSE:D&O) we really liked what we saw.

What is 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 D & O Green Technologies Berhad, this is the formula:

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

0.24 = RM134m ÷ (RM822m - RM268m) (Based on the trailing twelve months to March 2021).

Therefore, D & O Green Technologies Berhad has an ROCE of 24%. In absolute terms that's a great return and it's even better than the Semiconductor industry average of 13%.

Check out our latest analysis for D & O Green Technologies Berhad

In the above chart we have measured D & O Green Technologies Berhad's prior ROCE against its prior performance, but the future is arguably more important. 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.

What Can We Tell From D & O Green Technologies Berhad's ROCE Trend?

Investors would be pleased with what's happening at D & O Green Technologies Berhad. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 24%. 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 105%. 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 Key Takeaway

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what D & O Green Technologies Berhad has. Since the stock has returned a staggering 1,404% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if D & O Green Technologies Berhad can keep these trends up, it could have a bright future ahead.

On a separate note, we've found 2 warning signs for D & O Green Technologies Berhad you'll probably want to know about.

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.

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