Gulf International Services Q.P.S.C's (DSM:GISS) Returns On Capital Are Heading Higher

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base 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. So on that note, Gulf International Services Q.P.S.C (DSM:GISS) looks quite promising in regards to its trends of return on capital.

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What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Gulf International Services Q.P.S.C, this is the formula:

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

0.083 = ر.ق799m ÷ (ر.ق12b - ر.ق2.1b) (Based on the trailing twelve months to June 2025).

Thus, Gulf International Services Q.P.S.C has an ROCE of 8.3%. On its own that's a low return on capital but it's in line with the industry's average returns of 8.5%.

View our latest analysis for Gulf International Services Q.P.S.C

In the above chart we have measured Gulf International Services 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 Gulf International Services Q.P.S.C .

How Are Returns Trending?

We're glad to see that ROCE is heading in the right direction, even if it is still low at the moment. The data shows that returns on capital have increased substantially over the last five years to 8.3%. The amount of capital employed has increased too, by 26%. So we're very much inspired by what we're seeing at Gulf International Services Q.P.S.C thanks to its ability to profitably reinvest capital.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 18%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. So shareholders would be pleased that the growth in returns has mostly come from underlying business performance.

Our Take On Gulf International Services Q.P.S.C's ROCE

All in all, it's terrific to see that Gulf International Services Q.P.S.C is reaping the rewards from prior investments and is growing its capital base. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Gulf International Services Q.P.S.C can keep these trends up, it could have a bright future ahead.

On a final note, we found 2 warning signs for Gulf International Services Q.P.S.C (1 doesn't sit too well with us) you should be aware of.

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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.