Investors Met With Slowing Returns on Capital At Estithmar Holding Q.P.S.C (DSM:IGRD)

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Although, when we looked at Estithmar Holding Q.P.S.C (DSM:IGRD), it didn't seem to tick all of these boxes.

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Understanding 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 Estithmar Holding Q.P.S.C, this is the formula:

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

0.081 = ر.ق669m ÷ (ر.ق12b - ر.ق3.7b) (Based on the trailing twelve months to March 2025).

Therefore, Estithmar Holding Q.P.S.C has an ROCE of 8.1%. On its own, that's a low figure but it's around the 8.6% average generated by the Construction industry.

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're interested, you can view the analysts predictions in our free analyst report for Estithmar Holding Q.P.S.C .

What Does the ROCE Trend For Estithmar Holding Q.P.S.C Tell Us?

There are better returns on capital out there than what we're seeing at Estithmar Holding Q.P.S.C. The company has consistently earned 8.1% for the last three years, and the capital employed within the business has risen 158% in that time. 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 Estithmar Holding Q.P.S.C's ROCE

In summary, Estithmar Holding Q.P.S.C has simply been reinvesting capital and generating the same low rate of return as before. Since the stock has gained an impressive 71% over the last three years, investors must think there's better things to come. Ultimately, if the underlying trends persist, we wouldn't hold our breath on it being a multi-bagger going forward.

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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.