Professional Medical Expertise (TADAWUL:9574) Will Want To Turn Around Its Return Trends

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. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at Professional Medical Expertise (TADAWUL:9574), they do have a high ROCE, but we weren't exactly elated from how returns are trending.

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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. To calculate this metric for Professional Medical Expertise, this is the formula:

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

0.33 = ر.س49m ÷ (ر.س384m - ر.س236m) (Based on the trailing twelve months to June 2025).

Therefore, Professional Medical Expertise has an ROCE of 33%. That's a fantastic return and not only that, it outpaces the average of 14% earned by companies in a similar industry.

See our latest analysis for Professional Medical Expertise

Historical performance is a great place to start when researching a stock so above you can see the gauge for Professional Medical Expertise's ROCE against it's prior returns. If you'd like to look at how Professional Medical Expertise has performed in the past in other metrics, you can view this free graph of Professional Medical Expertise's past earnings, revenue and cash flow.

So How Is Professional Medical Expertise's ROCE Trending?

When we looked at the ROCE trend at Professional Medical Expertise, we didn't gain much confidence. To be more specific, while the ROCE is still high, it's fallen from 49% where it was four years ago. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance.

On a side note, Professional Medical Expertise has done well to pay down its current liabilities to 62% of total assets. So we could link some of this to the decrease in ROCE. Effectively this means their suppliers or short-term creditors are funding less of the business, which reduces some elements of risk. Some would claim this reduces the business' efficiency at generating ROCE since it is now funding more of the operations with its own money. Either way, they're still at a pretty high level, so we'd like to see them fall further if possible.

What We Can Learn From Professional Medical Expertise's ROCE

Even though returns on capital have fallen in the short term, we find it promising that revenue and capital employed have both increased for Professional Medical Expertise. In light of this, the stock has only gained 4.7% over the last year. So this stock may still be an appealing investment opportunity, if other fundamentals prove to be sound.

If you want to know some of the risks facing Professional Medical Expertise we've found 3 warning signs (1 is concerning!) that you should be aware of before investing here.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning 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.