Returns At Dr. Sulaiman Al Habib Medical Services Group (TADAWUL:4013) Are On The Way Up

There are a few key trends to look for if we want to identify the next multi-bagger. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at Dr. Sulaiman Al Habib Medical Services Group (TADAWUL:4013) and its trend of ROCE, we really liked what we saw.

What Is Return On Capital Employed (ROCE)?

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. The formula for this calculation on Dr. Sulaiman Al Habib Medical Services Group is:

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

0.17 = ر.س1.7b ÷ (ر.س13b - ر.س2.6b) (Based on the trailing twelve months to December 2022).

So, Dr. Sulaiman Al Habib Medical Services Group has an ROCE of 17%. In absolute terms, that's a satisfactory return, but compared to the Healthcare industry average of 12% it's much better.

See our latest analysis for Dr. Sulaiman Al Habib Medical Services Group

Above you can see how the current ROCE for Dr. Sulaiman Al Habib Medical Services Group compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Dr. Sulaiman Al Habib Medical Services Group here for free.

SWOT Analysis for Dr. Sulaiman Al Habib Medical Services Group

What Does the ROCE Trend For Dr. Sulaiman Al Habib Medical Services Group Tell Us?

The trends we've noticed at Dr. Sulaiman Al Habib Medical Services Group are quite reassuring. Over the last five years, returns on capital employed have risen substantially to 17%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 75%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

Our Take On Dr. Sulaiman Al Habib Medical Services Group's ROCE

All in all, it's terrific to see that Dr. Sulaiman Al Habib Medical Services Group is reaping the rewards from prior investments and is growing its capital base. And a remarkable 401% total return over the last three years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

While Dr. Sulaiman Al Habib Medical Services Group looks impressive, no company is worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 4013 is currently trading for a fair price.

While Dr. Sulaiman Al Habib Medical Services Group isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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.