Returns At SABIC Agri-Nutrients (TADAWUL:2020) Appear To Be Weighed Down

There are a few key trends to look for if we want to identify the next multi-bagger. 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. With that in mind, the ROCE of SABIC Agri-Nutrients (TADAWUL:2020) looks decent, right now, so lets see what the trend of returns can tell us.

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. Analysts use this formula to calculate it for SABIC Agri-Nutrients:

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

0.14 = ر.س3.0b ÷ (ر.س26b - ر.س3.6b) (Based on the trailing twelve months to December 2024).

Thus, SABIC Agri-Nutrients has an ROCE of 14%. On its own, that's a standard return, however it's much better than the 5.1% generated by the Chemicals industry.

See our latest analysis for SABIC Agri-Nutrients

Above you can see how the current ROCE for SABIC Agri-Nutrients compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for SABIC Agri-Nutrients .

What Does the ROCE Trend For SABIC Agri-Nutrients Tell Us?

While the current returns on capital are decent, they haven't changed much. The company has employed 144% more capital in the last five years, and the returns on that capital have remained stable at 14%. 14% is a pretty standard return, and it provides some comfort knowing that SABIC Agri-Nutrients has consistently earned this amount. 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.

Our Take On SABIC Agri-Nutrients' ROCE

In the end, SABIC Agri-Nutrients has proven its ability to adequately reinvest capital at good rates of return. On top of that, the stock has rewarded shareholders with a remarkable 140% return to those who've held over the last five years. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.

If you want to continue researching SABIC Agri-Nutrients, you might be interested to know about the 1 warning sign that our analysis has discovered.

While SABIC Agri-Nutrients 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.