Saudi Arabian Mining Company (Ma'aden) (TADAWUL:1211) Shareholders Will Want The ROCE Trajectory To Continue

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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 on that note, Saudi Arabian Mining Company (Ma'aden) (TADAWUL:1211) looks quite promising in regards to its trends of return on capital.

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What Is 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. The formula for this calculation on Saudi Arabian Mining Company (Ma'aden) is:

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

0.075 = ر.س7.6b ÷ (ر.س118b - ر.س16b) (Based on the trailing twelve months to March 2025).

So, Saudi Arabian Mining Company (Ma'aden) has an ROCE of 7.5%. In absolute terms, that's a low return and it also under-performs the Metals and Mining industry average of 20%.

See our latest analysis for Saudi Arabian Mining Company (Ma'aden)

In the above chart we have measured Saudi Arabian Mining Company (Ma'aden)'s prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Saudi Arabian Mining Company (Ma'aden) .

The Trend Of ROCE

Saudi Arabian Mining Company (Ma'aden)'s ROCE growth is quite impressive. More specifically, while the company has kept capital employed relatively flat over the last five years, the ROCE has climbed 1,309% in that same time. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.

Our Take On Saudi Arabian Mining Company (Ma'aden)'s ROCE

To bring it all together, Saudi Arabian Mining Company (Ma'aden) has done well to increase the returns it's generating from its capital employed. And a remarkable 310% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Saudi Arabian Mining Company (Ma'aden) can keep these trends up, it could have a bright future ahead.

Like most companies, Saudi Arabian Mining Company (Ma'aden) does come with some risks, and we've found 1 warning sign that you should be aware of.

While Saudi Arabian Mining Company (Ma'aden) may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.