Canadian General Medical Center Complex's (TADAWUL:9518) Returns Have Hit A Wall

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. 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. Having said that, from a first glance at Canadian General Medical Center Complex (TADAWUL:9518) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

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. The formula for this calculation on Canadian General Medical Center Complex is:

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

0.17 = ر.س17m ÷ (ر.س109m - ر.س11m) (Based on the trailing twelve months to December 2022).

Thus, Canadian General Medical Center Complex 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.

Check out our latest analysis for Canadian General Medical Center Complex

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Canadian General Medical Center Complex has performed in the past in other metrics, you can view this free graph of past earnings, revenue and cash flow.

SWOT Analysis for Canadian General Medical Center Complex

What Does the ROCE Trend For Canadian General Medical Center Complex Tell Us?

Over the past two years, Canadian General Medical Center Complex's ROCE and capital employed have both remained mostly flat. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So unless we see a substantial change at Canadian General Medical Center Complex in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger.

In Conclusion...

We can conclude that in regards to Canadian General Medical Center Complex's returns on capital employed and the trends, there isn't much change to report on. Since the stock has declined 18% over the last year, investors may not be too optimistic on this trend improving either. Therefore based on the analysis done in this article, we don't think Canadian General Medical Center Complex has the makings of a multi-bagger.

If you'd like to know more about Canadian General Medical Center Complex, we've spotted 2 warning signs, and 1 of them shouldn't be ignored.

While Canadian General Medical Center Complex 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.