What are the initial trends we should look for to identify stocks that may increase in value in the long run? Among other things, we will want to see two things; first, growth return on capital employed (ROCE) and secondly, an expansion of the company ‘s capital size of the capital employed. If you see this, it usually means that it is a company with a great business model and many lucrative reinvestment opportunities. So when we ran our eyes over Dr. Sulaiman Al Habib Medical Services Group (TÁDAW: 4013) trend of ROCE, liked what we saw.
What is a Return on Used Capital (ROCE)?
To clarify if you are unsure, ROCE is a metric for estimating how much pre – tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Dr. Sulaiman Al Habib’s Medical Services Group, the formula is:
Return on Used Capital = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.17 = $ 1.5b ÷ ($ 11b – $ US2.0b) (Based on the twelve month track to December 2021).
So, Dr. has a ROCE of 17%. Sulaiman Al Habib Medical Services Group. In absolute terms, that is a satisfactory result, but compared to the Healthcare industry average of 11% it is much better.
In the chart above we have measured Dr Sulaiman Al Habib’s Medical Services Group’s ROCE against its previous performance, but it could be argued that the future is more important. If you are interested, you can see the analysts’ predictions in our section cheap report on analyst forecasts for the company.
What ROCE Trend Tells Dr. Sulaiman Al Habib Medical Services Group Us?
While the returns on capital are good, they have not moved much. Over the past five years, ROCE has remained relatively flat at around 17% and the business has deployed an additional 59% of capital in its operations. However, with ROCE being modest at 17%, it is good to see that a business can continue to reinvest at these reasonable rates of return. Over long periods of time, results like this may not be too exciting, but with consistency they can pay off in terms of share price returns.
In summary, only Dr. Sulaiman Al Habib Medical Services Group is consistently reinvesting capital, at such reasonable rates of return. So it’s no surprise that shareholders deserve a respectable 47% return if they have held in the last year. So while investors may be recognizing these optimistic trends, we still believe the stock deserves further research.
Dr. could. Sulaiman Al Habib Medical Services Group is trading at an attractive price in other ways, so you may find our unique place. Free intrinsic value estimate, on our quite valuable platform.
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