Estithmar Holding Q.P.S.C (DSM:IGRD) Hasn't Managed To Accelerate Its Returns

If you're looking for a multi-bagger, there's a few things to keep an eye out for. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Having said that, from a first glance at Estithmar Holding Q.P.S.C (DSM:IGRD) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

What Is 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. Analysts use this formula to calculate it for Estithmar Holding Q.P.S.C:

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

0.077 = ر.ق475m ÷ (ر.ق8.7b - ر.ق2.6b) (Based on the trailing twelve months to September 2023).

Thus, Estithmar Holding Q.P.S.C has an ROCE of 7.7%. On its own that's a low return on capital but it's in line with the industry's average returns of 7.6%.

Check out our latest analysis for Estithmar Holding Q.P.S.C

In the above chart we have measured Estithmar Holding Q.P.S.C'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 Estithmar Holding Q.P.S.C.

How Are Returns Trending?

There hasn't been much to report for Estithmar Holding Q.P.S.C's returns and its level of capital employed because both metrics have been steady for the past one year. 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 Estithmar Holding Q.P.S.C doesn't end up being a multi-bagger in a few years time. On top of that you'll notice that Estithmar Holding Q.P.S.C has been paying out a large portion (68%) of earnings in the form of dividends to shareholders. Most shareholders probably know this and own the stock for its dividend.

Our Take On Estithmar Holding Q.P.S.C's ROCE

In summary, Estithmar Holding Q.P.S.C isn't compounding its earnings but is generating stable returns on the same amount of capital employed. And with the stock having returned a mere 2.7% in the last year to shareholders, you could argue that they're aware of these lackluster trends. As a result, if you're hunting for a multi-bagger, we think you'd have more luck elsewhere.

On a separate note, we've found 1 warning sign for Estithmar Holding Q.P.S.C you'll probably want to know about.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.