Some Investors May Be Worried About Baladna Q.P.S.C's (DSM:BLDN) Returns On Capital

If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. In light of that, when we looked at Baladna Q.P.S.C (DSM:BLDN) and its ROCE trend, we weren't exactly thrilled.

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Return On Capital Employed (ROCE): What Is It?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Baladna Q.P.S.C:

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

0.036 = ر.ق178m ÷ (ر.ق5.6b - ر.ق740m) (Based on the trailing twelve months to September 2025).

Thus, Baladna Q.P.S.C has an ROCE of 3.6%. In absolute terms, that's a low return and it also under-performs the Food industry average of 9.4%.

See our latest analysis for Baladna Q.P.S.C

In the above chart we have measured Baladna Q.P.S.C's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Baladna Q.P.S.C for free.

How Are Returns Trending?

On the surface, the trend of ROCE at Baladna Q.P.S.C doesn't inspire confidence. To be more specific, ROCE has fallen from 4.9% over the last five years. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It may take some time before the company starts to see any change in earnings from these investments.

The Bottom Line On Baladna Q.P.S.C's ROCE

In summary, Baladna Q.P.S.C is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. Additionally, the stock's total return to shareholders over the last five years has been flat, which isn't too surprising. Therefore based on the analysis done in this article, we don't think Baladna Q.P.S.C has the makings of a multi-bagger.

One more thing: We've identified 4 warning signs with Baladna Q.P.S.C (at least 2 which are concerning) , and understanding these would certainly be useful.

While Baladna 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.