Oriental Rise Holdings (NASDAQ:ORIS) Is Reinvesting At Lower Rates Of Return

What trends should we look for it we want to identify stocks that can multiply in value over the long term? 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. However, after briefly looking over the numbers, we don't think Oriental Rise Holdings (NASDAQ:ORIS) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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Understanding 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. The formula for this calculation on Oriental Rise Holdings is:

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

0.0013 = US$90k ÷ (US$74m - US$2.0m) (Based on the trailing twelve months to June 2025).

Therefore, Oriental Rise Holdings has an ROCE of 0.1%. Ultimately, that's a low return and it under-performs the Food industry average of 9.3%.

View our latest analysis for Oriental Rise Holdings

Historical performance is a great place to start when researching a stock so above you can see the gauge for Oriental Rise Holdings' ROCE against it's prior returns. If you'd like to look at how Oriental Rise Holdings has performed in the past in other metrics, you can view this free graph of Oriental Rise Holdings' past earnings, revenue and cash flow.

So How Is Oriental Rise Holdings' ROCE Trending?

In terms of Oriental Rise Holdings' historical ROCE movements, the trend isn't fantastic. Over the last four years, returns on capital have decreased to 0.1% from 20% four years ago. Given the business is employing more capital while revenue has slipped, this is a bit concerning. If this were to continue, you might be looking at a company that is trying to reinvest for growth but is actually losing market share since sales haven't increased.

Our Take On Oriental Rise Holdings' ROCE

From the above analysis, we find it rather worrisome that returns on capital and sales for Oriental Rise Holdings have fallen, meanwhile the business is employing more capital than it was four years ago. We expect this has contributed to the stock plummeting 99% during the last year. Unless there is a shift to a more positive trajectory in these metrics, we would look elsewhere.

One final note, you should learn about the 4 warning signs we've spotted with Oriental Rise Holdings (including 3 which are significant) .

While Oriental Rise Holdings may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.