Returns On Capital At Amtel Holdings Berhad (KLSE:AMTEL) Have Hit The Brakes

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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. Although, when we looked at Amtel Holdings Berhad (KLSE:AMTEL), it didn't seem to tick all of these boxes.

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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. Analysts use this formula to calculate it for Amtel Holdings Berhad:

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

0.082 = RM6.6m ÷ (RM93m - RM13m) (Based on the trailing twelve months to May 2025).

Thus, Amtel Holdings Berhad has an ROCE of 8.2%. In absolute terms, that's a low return and it also under-performs the Electronic industry average of 12%.

View our latest analysis for Amtel Holdings Berhad

Historical performance is a great place to start when researching a stock so above you can see the gauge for Amtel Holdings Berhad's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Amtel Holdings Berhad.

What The Trend Of ROCE Can Tell Us

There are better returns on capital out there than what we're seeing at Amtel Holdings Berhad. Over the past five years, ROCE has remained relatively flat at around 8.2% and the business has deployed 57% more capital into its operations. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

The Bottom Line On Amtel Holdings Berhad's ROCE

In summary, Amtel Holdings Berhad has simply been reinvesting capital and generating the same low rate of return as before. Since the stock has declined 16% over the last five years, investors may not be too optimistic on this trend improving either. 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 more thing, we've spotted 2 warning signs facing Amtel Holdings Berhad that you might find interesting.

While Amtel Holdings Berhad isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.