Shareholders Would Enjoy A Repeat Of SAL Saudi Logistics Services' (TADAWUL:4263) Recent Growth In Returns

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Speaking of which, we noticed some great changes in SAL Saudi Logistics Services' (TADAWUL:4263) returns on capital, so let's have a look.

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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. To calculate this metric for SAL Saudi Logistics Services, this is the formula:

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

0.23 = ر.س647m ÷ (ر.س3.2b - ر.س403m) (Based on the trailing twelve months to March 2025).

Thus, SAL Saudi Logistics Services has an ROCE of 23%. In absolute terms that's a great return and it's even better than the Logistics industry average of 7.8%.

View our latest analysis for SAL Saudi Logistics Services

In the above chart we have measured SAL Saudi Logistics Services' 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 SAL Saudi Logistics Services .

What Can We Tell From SAL Saudi Logistics Services' ROCE Trend?

SAL Saudi Logistics Services has not disappointed with their ROCE growth. More specifically, while the company has kept capital employed relatively flat over the last four years, the ROCE has climbed 101% in that same time. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

The Key Takeaway

To sum it up, SAL Saudi Logistics Services is collecting higher returns from the same amount of capital, and that's impressive. And since the stock has fallen 43% over the last year, there might be an opportunity here. With that in mind, we believe the promising trends warrant this stock for further investigation.

While SAL Saudi Logistics Services looks impressive, no company is worth an infinite price. The intrinsic value infographic for 4263 helps visualize whether it is currently trading for a fair price.

SAL Saudi Logistics Services is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.