Returns At Industries Qatar Q.P.S.C (DSM:IQCD) Are On The Way Up

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. So when we looked at Industries Qatar Q.P.S.C (DSM:IQCD) and its trend of ROCE, we really liked what we saw.

We've discovered 1 warning sign about Industries Qatar Q.P.S.C. View them for free.

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. The formula for this calculation on Industries Qatar Q.P.S.C is:

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

0.05 = ر.ق2.0b ÷ (ر.ق42b - ر.ق2.8b) (Based on the trailing twelve months to December 2024).

Thus, Industries Qatar Q.P.S.C has an ROCE of 5.0%. Ultimately, that's a low return and it under-performs the Industrials industry average of 6.6%.

View our latest analysis for Industries Qatar Q.P.S.C

Above you can see how the current ROCE for Industries Qatar Q.P.S.C compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Industries Qatar Q.P.S.C for free.

How Are Returns Trending?

Industries Qatar Q.P.S.C has broken into the black (profitability) and we're sure it's a sight for sore eyes. The company now earns 5.0% on its capital, because five years ago it was incurring losses. While returns have increased, the amount of capital employed by Industries Qatar Q.P.S.C has remained flat over the period. That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward. So if you're looking for high growth, you'll want to see a business's capital employed also increasing.

Our Take On Industries Qatar Q.P.S.C's ROCE

In summary, we're delighted to see that Industries Qatar Q.P.S.C has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And a remarkable 148% total return over the last five years tells us that investors are expecting more good things to come in the future. Therefore, we think it would be worth your time to check if these trends are going to continue.

If you want to continue researching Industries Qatar Q.P.S.C, you might be interested to know about the 1 warning sign that our analysis has discovered.

While Industries Qatar Q.P.S.C may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.