Investors Will Want Qatar Navigation Q.P.S.C's (DSM:QNNS) Growth In ROCE To Persist

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at Qatar Navigation Q.P.S.C (DSM:QNNS) so let's look a bit deeper.

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Understanding 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. Analysts use this formula to calculate it for Qatar Navigation Q.P.S.C:

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

0.03 = ر.ق540m ÷ (ر.ق19b - ر.ق1.5b) (Based on the trailing twelve months to March 2025).

Thus, Qatar Navigation Q.P.S.C has an ROCE of 3.0%. In absolute terms, that's a low return and it also under-performs the Shipping industry average of 8.0%.

Check out our latest analysis for Qatar Navigation Q.P.S.C

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Qatar Navigation Q.P.S.C has performed in the past in other metrics, you can view this free graph of Qatar Navigation Q.P.S.C's past earnings, revenue and cash flow.

What Can We Tell From Qatar Navigation Q.P.S.C's ROCE Trend?

While there are companies with higher returns on capital out there, we still find the trend at Qatar Navigation Q.P.S.C promising. The figures show that over the last five years, ROCE has grown 78% whilst employing roughly the same amount of capital. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.

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

To bring it all together, Qatar Navigation Q.P.S.C has done well to increase the returns it's generating from its capital employed. 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 Qatar Navigation Q.P.S.C can keep these trends up, it could have a bright future ahead.

While Qatar Navigation Q.P.S.C looks impressive, no company is worth an infinite price. The intrinsic value infographic for QNNS helps visualize whether it is currently trading for a fair price.

While Qatar Navigation 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.