Here's What To Make Of Canadian General Medical Center Complex's (TADAWUL:9518) Decelerating Rates Of Return

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. However, after investigating Canadian General Medical Center Complex (TADAWUL:9518), we don't think it's current trends fit the mold of a multi-bagger.

Return On Capital Employed (ROCE): What Is It?

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)

0.11 = ر.س11m ÷ (ر.س118m - ر.س18m) (Based on the trailing twelve months to June 2024).

Thus, Canadian General Medical Center Complex has an ROCE of 11%. In isolation, that's a pretty standard return but against the Healthcare industry average of 14%, it's not as good.

View our latest analysis for Canadian General Medical Center Complex

Historical performance is a great place to start when researching a stock so above you can see the gauge for Canadian General Medical Center Complex's ROCE against it's prior returns. 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 Canadian General Medical Center Complex's past earnings, revenue and cash flow.

The Trend Of ROCE

There hasn't been much to report for Canadian General Medical Center Complex's returns and its level of capital employed because both metrics have been steady for the past three years. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect Canadian General Medical Center Complex to be a multi-bagger going forward.

The Bottom Line On Canadian General Medical Center Complex's ROCE

In summary, Canadian General Medical Center Complex isn't compounding its earnings but is generating stable returns on the same amount of capital employed. Since the stock has declined 18% over the last three years, investors may not be too optimistic on this trend improving either. In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere.

Canadian General Medical Center Complex does have some risks, we noticed 3 warning signs (and 1 which can't be ignored) we think you should know about.

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.