We Like These Underlying Return On Capital Trends At National Company for Learning and Education (TADAWUL:4291)

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. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, National Company for Learning and Education (TADAWUL:4291) looks quite promising in regards to its trends of return on capital.

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. Analysts use this formula to calculate it for National Company for Learning and Education:

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

0.17 = ر.س194m ÷ (ر.س1.3b - ر.س164m) (Based on the trailing twelve months to July 2024).

Therefore, National Company for Learning and Education has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 13% generated by the Consumer Services industry.

See our latest analysis for National Company for Learning and Education

Above you can see how the current ROCE for National Company for Learning and Education compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for National Company for Learning and Education .

What Does the ROCE Trend For National Company for Learning and Education Tell Us?

The trends we've noticed at National Company for Learning and Education are quite reassuring. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 17%. Basically the business is earning more per dollar of capital invested and in addition to that, 67% more capital is being employed now too. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

The Bottom Line

To sum it up, National Company for Learning and Education has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And a remarkable 614% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if National Company for Learning and Education can keep these trends up, it could have a bright future ahead.

If you'd like to know about the risks facing National Company for Learning and Education, we've discovered 1 warning sign that you should be aware of.

While National Company for Learning and Education 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.