We're Watching These Trends At Bintulu Port Holdings Berhad (KLSE:BIPORT)

There are a few key trends to look for if we want to identify the next 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. However, after briefly looking over the numbers, we don't think Bintulu Port Holdings Berhad (KLSE:BIPORT) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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 Bintulu Port Holdings Berhad is:

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

0.062 = RM169m ÷ (RM3.0b - RM244m) (Based on the trailing twelve months to December 2020).

So, Bintulu Port Holdings Berhad has an ROCE of 6.2%. Even though it's in line with the industry average of 6.2%, it's still a low return by itself.

Check out our latest analysis for Bintulu Port Holdings Berhad

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

What Does the ROCE Trend For Bintulu Port Holdings Berhad Tell Us?

Things have been pretty stable at Bintulu Port Holdings Berhad, with its capital employed and returns on that capital staying somewhat the same for the last 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 Bintulu Port Holdings Berhad doesn't end up being a multi-bagger in a few years time.

The Bottom Line On Bintulu Port Holdings Berhad's ROCE

In a nutshell, Bintulu Port Holdings Berhad has been trudging along with the same returns from the same amount of capital over the last five years. Since the stock has declined 33% over the last five years, investors may not be too optimistic on this trend improving either. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.

Bintulu Port Holdings Berhad does have some risks, we noticed 3 warning signs (and 2 which don't sit too well with us) we think you should know about.

While Bintulu Port 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. 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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