Returns At Gulf Warehousing Company Q.P.S.C (DSM:GWCS) Appear To Be Weighed Down

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after briefly looking over the numbers, we don't think Gulf Warehousing Company Q.P.S.C (DSM:GWCS) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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

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 Gulf Warehousing Company Q.P.S.C is:

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

0.081 = ر.ق295m ÷ (ر.ق4.6b - ر.ق947m) (Based on the trailing twelve months to September 2022).

So, Gulf Warehousing Company Q.P.S.C has an ROCE of 8.1%. In absolute terms, that's a low return but it's around the Logistics industry average of 9.1%.

See our latest analysis for Gulf Warehousing Company Q.P.S.C

In the above chart we have measured Gulf Warehousing Company 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 report on analyst forecasts for the company.

The Trend Of ROCE

Over the past five years, Gulf Warehousing Company Q.P.S.C's ROCE and capital employed have both remained mostly flat. 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 Gulf Warehousing Company Q.P.S.C doesn't end up being a multi-bagger in a few years time.

The Bottom Line

We can conclude that in regards to Gulf Warehousing Company Q.P.S.C's returns on capital employed and the trends, there isn't much change to report on. And with the stock having returned a mere 11% in the last five years 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.

Gulf Warehousing Company Q.P.S.C does have some risks though, and we've spotted 1 warning sign for Gulf Warehousing Company Q.P.S.C that you might be interested in.

While Gulf Warehousing Company 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.