To find multibagger stocks, what are the fundamental trends in companies? First, let’s look at proven results. return One is growing capital employed (ROCE) and second is growing capital employed (ROCE). base of capital employed. This shows that it is a compounding machine and the earnings can be continuously reinvested into the business to generate higher profits. With that in mind, the trends we see are: Hibiscus Petroleum Berhad (KLSE:HIBISCS) looks very promising, so let’s take a look.
About Return on Capital Employed (ROCE)
In case you aren’t familiar, ROCE is a metric that measures how much pre-tax profit (as a percentage) a company earns on the capital invested in its business. This formula for Hibiscus Petroleum Berhad is:
Return on Capital Employed = Earnings before interest and tax (EBIT) ÷ (Total assets – Current liabilities)
0.25 = RM1.2b ÷ (RM6.4b – RM1.5b) (Based on the previous 12 months to December 2023).
So, Hibiscus Petroleum Berhad’s ROCE is 25%. In absolute terms, this is a significant gain, even better than the oil and gas industry average of 13%.
See our latest analysis for Hibiscus Petroleum Berhad.
In the chart above, we’ve measured Hibiscus Petroleum Berhad’s previous ROCE against its previous performance, but the future is probably more important. If you’re interested, take a look at our analyst forecasts. free Hibiscus Petroleum Berhad Analyst Report.
What are the trends in Hibiscus Petroleum Berhad’s ROCE?
Investors will be happy with what’s happening with Hibiscus Petroleum Berhad. This figure shows that over the past five years, the return generated from the capital employed has increased significantly by his 25%. It is worth noting that the company has virtually increased its return per dollar of capital employed, and the amount of capital has also increased by 160%. Increasing returns due to increased capital is common for multibaggers, which is why we’re impressed.
The conclusion is…
Overall, it’s great to see Hibiscus Petroleum Berhad growing its capital base by benefiting from previous investments. The company’s stock has returned only 16% to shareholders over the past five years, so its promising fundamentals may not yet be recognized by investors. With that in mind, I’d like to take a closer look in case this strain has more characteristics that could allow it to thrive over the long term.
However, Hibiscus Petroleum Berhad comes with some risks. 3 warning signs in our investment analysis, One of them doesn’t really suit us…
High returns are a key element of strong performance. free A list of stocks with solid balance sheets and high return on equity.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
