Return on Capital Employed (ROCE) is an important metric to consider when identifying potential multi-baggers in the stock market. It measures how efficiently a company can generate profits from its capital investment. When analyzing Etihad Atheeb Telecommunication (TADAWUL:7040), we found an encouraging trend of growing ROCE.
ROCE is calculated by dividing Earnings Before Interest and Tax (EBIT) by Total Assets minus Current Liabilities. In the case of Etihad Atheeb Telecommunication, its ROCE is 18%, a significant improvement compared to the telecom industry average of 11%.
Looking at the historical performance of the company, we can see that it has recently become profitable, earning 18% on its capital. The capital employed has remained relatively flat, indicating that the higher returns are a result of prior investments paying off or increased efficiency.
It is worth noting that the company’s ratio of current liabilities to total assets has decreased to 52%. This indicates a reduced reliance on short-term creditors or suppliers for funding. Shareholders would be pleased to know that the growth in returns has mostly come from underlying business performance.
Etihad Atheeb Telecommunication has generated a staggering 220% return to shareholders over the past year, indicating that investors are recognizing its positive trends. However, it is important to conduct further research to determine if these trends are likely to persist.
It is also worth considering potential risks associated with the company’s high current liabilities. Nonetheless, Etihad Atheeb Telecommunication has shown promising growth in returns and is worth further investigation.
Please note that this article should not be considered as financial advice. It provides commentary based on historical data and analyst forecasts. Always do your own research before making any investment decisions.