Stock Analysis

Returns At Naba Al Saha Medical Services (TADAWUL:9546) Appear To Be Weighed Down

SASE:9546
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There are a few key trends to look for if we want to identify the next multi-bagger. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base 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 ran our eye over Naba Al Saha Medical Services' (TADAWUL:9546) trend of ROCE, we liked what we saw.

What Is Return On Capital Employed (ROCE)?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on Naba Al Saha Medical Services is:

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

0.19 = ر.س44m ÷ (ر.س277m - ر.س46m) (Based on the trailing twelve months to December 2023).

So, Naba Al Saha Medical Services has an ROCE of 19%. In absolute terms, that's a satisfactory return, but compared to the Healthcare industry average of 15% it's much better.

Check out our latest analysis for Naba Al Saha Medical Services

roce
SASE:9546 Return on Capital Employed August 27th 2024

Historical performance is a great place to start when researching a stock so above you can see the gauge for Naba Al Saha Medical Services' ROCE against it's prior returns. If you're interested in investigating Naba Al Saha Medical Services' past further, check out this free graph covering Naba Al Saha Medical Services' past earnings, revenue and cash flow.

The Trend Of ROCE

While the returns on capital are good, they haven't moved much. Over the past three years, ROCE has remained relatively flat at around 19% and the business has deployed 84% more capital into its operations. Since 19% is a moderate ROCE though, it's good to see a business can continue to reinvest at these decent rates of return. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.

The Bottom Line On Naba Al Saha Medical Services' ROCE

The main thing to remember is that Naba Al Saha Medical Services has proven its ability to continually reinvest at respectable rates of return. Therefore it's no surprise that shareholders have earned a respectable 99% return if they held over the last year. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.

One more thing to note, we've identified 2 warning signs with Naba Al Saha Medical Services and understanding these should be part of your investment process.

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

Valuation is complex, but we're here to simplify it.

Discover if Naba Al Saha Medical Services might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.