Returns At Mobile Telecommunications Company Saudi Arabia (TADAWUL:7030) Are On The Way Up

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. 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, we've noticed some promising trends at Mobile Telecommunications Company Saudi Arabia (TADAWUL:7030) so let's look a bit deeper.

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Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Mobile Telecommunications Company Saudi Arabia:

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

0.079 = ر.س1.3b ÷ (ر.س28b - ر.س12b) (Based on the trailing twelve months to June 2025).

Thus, Mobile Telecommunications Company Saudi Arabia has an ROCE of 7.9%. In absolute terms, that's a low return and it also under-performs the Wireless Telecom industry average of 12%.

Check out our latest analysis for Mobile Telecommunications Company Saudi Arabia

Above you can see how the current ROCE for Mobile Telecommunications Company Saudi Arabia compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Mobile Telecommunications Company Saudi Arabia .

What Does the ROCE Trend For Mobile Telecommunications Company Saudi Arabia Tell Us?

We're pretty happy with how the ROCE has been trending at Mobile Telecommunications Company Saudi Arabia. The data shows that returns on capital have increased by 27% over the trailing five years. The company is now earning ر.س0.08 per dollar of capital employed. Interestingly, the business may be becoming more efficient because it's applying 28% less capital than it was five years ago. A business that's shrinking its asset base like this isn't usually typical of a soon to be multi-bagger company.

For the record though, there was a noticeable increase in the company's current liabilities over the period, so we would attribute some of the ROCE growth to that. Essentially the business now has suppliers or short-term creditors funding about 43% of its operations, which isn't ideal. Given it's pretty high ratio, we'd remind investors that having current liabilities at those levels can bring about some risks in certain businesses.

The Key Takeaway

In a nutshell, we're pleased to see that Mobile Telecommunications Company Saudi Arabia has been able to generate higher returns from less capital. And given the stock has remained rather flat over the last five years, there might be an opportunity here if other metrics are strong. So researching this company further and determining whether or not these trends will continue seems justified.

Mobile Telecommunications Company Saudi Arabia does have some risks though, and we've spotted 1 warning sign for Mobile Telecommunications Company Saudi Arabia that you might be interested in.

While Mobile Telecommunications Company Saudi Arabia 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.