Stock Analysis

National Industrialization (TADAWUL:2060) Might Have The Makings Of A Multi-Bagger

  •  Updated
SASE:2060
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If you're looking for a multi-bagger, there's a few things to keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at National Industrialization (TADAWUL:2060) so let's look a bit deeper.

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. Analysts use this formula to calculate it for National Industrialization:

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

0.03 = ر.س599m ÷ (ر.س26b - ر.س5.3b) (Based on the trailing twelve months to June 2022).

Thus, National Industrialization has an ROCE of 3.0%. Ultimately, that's a low return and it under-performs the Chemicals industry average of 9.4%.

See our latest analysis for National Industrialization

roce
SASE:2060 Return on Capital Employed September 25th 2022

In the above chart we have measured National Industrialization's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free report for National Industrialization.

What The Trend Of ROCE Can Tell Us

It's great to see that National Industrialization has started to generate some pre-tax earnings from prior investments. The company was generating losses five years ago, but now it's turned around, earning 3.0% which is no doubt a relief for some early shareholders. In regards to capital employed, National Industrialization is using 27% less capital than it was five years ago, which on the surface, can indicate that the business has become more efficient at generating these returns. This could potentially mean that the company is selling some of its assets.

Our Take On National Industrialization's ROCE

In a nutshell, we're pleased to see that National Industrialization has been able to generate higher returns from less capital. Given the stock has declined 11% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

If you'd like to know about the risks facing National Industrialization, we've discovered 1 warning sign that you should be aware of.

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.

Valuation is complex, but we're helping make it simple.

Find out whether National Industrialization is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About SASE:2060

National Industrialization

National Industrialization Company operates in the petrochemicals, chemicals, plastics, engineering, and metals sectors worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth2
Past Performance1
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with adequate balance sheet.