Returns On Capital At Mobile Telecommunications Company Saudi Arabia (TADAWUL:7030) Have Hit The Brakes

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Although, when we looked at Mobile Telecommunications Company Saudi Arabia (TADAWUL:7030), it didn't seem to tick all of these boxes.

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Understanding 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. To calculate this metric for Mobile Telecommunications Company Saudi Arabia, this is the formula:

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

0.06 = ر.س1.3b ÷ (ر.س28b - ر.س6.6b) (Based on the trailing twelve months to September 2025).

Therefore, Mobile Telecommunications Company Saudi Arabia has an ROCE of 6.0%. In absolute terms, that's a low return and it also under-performs the Wireless Telecom industry average of 11%.

View 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'd like, you can check out the forecasts from the analysts covering Mobile Telecommunications Company Saudi Arabia for free.

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

Things have been pretty stable at Mobile Telecommunications Company Saudi Arabia, with its capital employed and returns on that capital staying somewhat the same for the last five years. It's not uncommon to see this when looking at a mature and stable business that isn't re-investing its earnings because it has likely passed that phase of the business cycle. So unless we see a substantial change at Mobile Telecommunications Company Saudi Arabia in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger. This probably explains why Mobile Telecommunications Company Saudi Arabia is paying out 51% of its income to shareholders in the form of dividends. Given the business isn't reinvesting in itself, it makes sense to distribute a portion of earnings among shareholders.

What We Can Learn From Mobile Telecommunications Company Saudi Arabia's ROCE

We can conclude that in regards to Mobile Telecommunications Company Saudi Arabia's returns on capital employed and the trends, there isn't much change to report on. And investors appear hesitant that the trends will pick up because the stock has fallen 11% in the last five years. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.

One more thing to note, we've identified 1 warning sign with Mobile Telecommunications Company Saudi Arabia and understanding it should be part of your investment process.

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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.