Investors Will Want Jabal Omar Development's (TADAWUL:4250) Growth In ROCE To Persist

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So on that note, Jabal Omar Development (TADAWUL:4250) looks quite promising in regards to its trends of return on capital.

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What Is Return On Capital Employed (ROCE)?

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. Analysts use this formula to calculate it for Jabal Omar Development:

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

0.016 = ر.س404m ÷ (ر.س27b - ر.س1.6b) (Based on the trailing twelve months to June 2025).

Therefore, Jabal Omar Development has an ROCE of 1.6%. Ultimately, that's a low return and it under-performs the Hospitality industry average of 10%.

View our latest analysis for Jabal Omar Development

Historical performance is a great place to start when researching a stock so above you can see the gauge for Jabal Omar Development's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Jabal Omar Development.

So How Is Jabal Omar Development's ROCE Trending?

Shareholders will be relieved that Jabal Omar Development has broken into profitability. The company was generating losses five years ago, but has managed to turn it around and as we saw earlier is now earning 1.6%, which is always encouraging. While returns have increased, the amount of capital employed by Jabal Omar Development has remained flat over the period. That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward. So if you're looking for high growth, you'll want to see a business's capital employed also increasing.

One more thing to note, Jabal Omar Development has decreased current liabilities to 6.0% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. So this improvement in ROCE has come from the business' underlying economics, which is great to see.

What We Can Learn From Jabal Omar Development's ROCE

To bring it all together, Jabal Omar Development has done well to increase the returns it's generating from its capital employed. And since the stock has fallen 47% over the last five years, there might be an opportunity here. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

On a final note, we found 2 warning signs for Jabal Omar Development (1 is potentially serious) you should be aware of.

While Jabal Omar Development 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.