Leejam Sports (TADAWUL:1830) Is Looking To Continue Growing Its Returns On Capital

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Leejam Sports (TADAWUL:1830) so let's look a bit deeper.

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

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. To calculate this metric for Leejam Sports, this is the formula:

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

0.14 = ر.س419m ÷ (ر.س4.1b - ر.س1.1b) (Based on the trailing twelve months to September 2025).

Thus, Leejam Sports has an ROCE of 14%. On its own, that's a standard return, however it's much better than the 9.0% generated by the Hospitality industry.

Check out our latest analysis for Leejam Sports

In the above chart we have measured Leejam Sports' 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 Leejam Sports for free.

So How Is Leejam Sports' ROCE Trending?

The trends we've noticed at Leejam Sports are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 14%. The amount of capital employed has increased too, by 57%. So we're very much inspired by what we're seeing at Leejam Sports thanks to its ability to profitably reinvest capital.

Our Take On Leejam Sports' ROCE

To sum it up, Leejam Sports has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 83% return over the last five years. Therefore, we think it would be worth your time to check if these trends are going to continue.

If you want to continue researching Leejam Sports, you might be interested to know about the 2 warning signs that our analysis has discovered.

While Leejam Sports isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.