Be Wary Of Dr. Soliman Abdel Kader Fakeeh Hospital (TADAWUL:4017) And Its Returns On Capital

What trends should we look for it we want to identify stocks that can multiply in value over the long term? 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after investigating Dr. Soliman Abdel Kader Fakeeh Hospital (TADAWUL:4017), we don't think it's current trends fit the mold of a multi-bagger.

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Understanding 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. Analysts use this formula to calculate it for Dr. Soliman Abdel Kader Fakeeh Hospital:

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

0.075 = ر.س335m ÷ (ر.س5.6b - ر.س1.1b) (Based on the trailing twelve months to June 2025).

Therefore, Dr. Soliman Abdel Kader Fakeeh Hospital has an ROCE of 7.5%. In absolute terms, that's a low return and it also under-performs the Healthcare industry average of 14%.

Check out our latest analysis for Dr. Soliman Abdel Kader Fakeeh Hospital

Above you can see how the current ROCE for Dr. Soliman Abdel Kader Fakeeh Hospital 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 Dr. Soliman Abdel Kader Fakeeh Hospital .

So How Is Dr. Soliman Abdel Kader Fakeeh Hospital's ROCE Trending?

On the surface, the trend of ROCE at Dr. Soliman Abdel Kader Fakeeh Hospital doesn't inspire confidence. Over the last five years, returns on capital have decreased to 7.5% from 12% five years ago. Although, given both revenue and the amount of assets employed in the business have increased, it could suggest the company is investing in growth, and the extra capital has led to a short-term reduction in ROCE. If these investments prove successful, this can bode very well for long term stock performance.

What We Can Learn From Dr. Soliman Abdel Kader Fakeeh Hospital's ROCE

In summary, despite lower returns in the short term, we're encouraged to see that Dr. Soliman Abdel Kader Fakeeh Hospital is reinvesting for growth and has higher sales as a result. And there could be an opportunity here if other metrics look good too, because the stock has declined 28% in the last year. So we think it'd be worthwhile to look further into this stock given the trends look encouraging.

While Dr. Soliman Abdel Kader Fakeeh Hospital doesn't shine too bright in this respect, it's still worth seeing if the company is trading at attractive prices. You can find that out with our FREE intrinsic value estimation for 4017 on our platform.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.