Did you know that there are several financial metrics that can provide clues to a potential multibagger? First, you want to identify what is growing. return In addition to capital employed (ROCE) continues to increase 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. So, I did a quick search and found that Edarat Communication and Information Technology (TADAWUL:9557) ROCE Trend, we were very happy with what we saw.
What is return on capital employed (ROCE)?
For those who aren’t sure what ROCE is, it measures the amount of pre-tax profit a company can generate from the capital employed in its business. Analysts use the following formula to perform Edarat Communications and Information Technology calculations.
Return on Capital Employed = Earnings before interest and tax (EBIT) ÷ (Total assets – Current liabilities)
0.45 = 6.20m ÷ (61m – 16m) (Based on the previous 12 months to December 2023).
therefore, Edarat Communication and Information Technology’s ROCE is 45%. This is a very high absolute profit margin, even better than the IT industry average of 30%.
Check out Edarat’s latest analysis on Communications and Information Technology.
Although the past does not represent the future, it can be helpful to know how a company has performed historically. That’s why I created this graph above. If you are interested in delving further into the past of Edarat Communication and Information Technology, check this out. free A graph covering Edarat Communication and Information Technology’s historical earnings, revenue and cash flow.
What do Edarat’s ROCE trends for Telecommunications and Information Technology indicate?
We are very happy with the return on capital like Edarat Communication and Information Technology. The company has deployed his 411% more capital over the past three years, and its return on capital has held steady at his 45%. A return like this would be the envy of most companies, and it’s even better considering it has been repeatedly reinvested at such rates. You can see this by looking at well-run businesses and lucrative business models.
As a side note, Edarat Communication and Information Technology was able to reduce its current liabilities to 27% of total assets over the past three years. In effect, suppliers are reducing their funding to the business, which may reduce some elements of risk.
What we can learn from Edarat Communication and Information Technology’s ROCE
Edarat Communication and Information Technology has demonstrated its proficiency in generating high returns on increased capital employed, and we are excited about this. And the company followed suit, returning a hefty 33% to shareholders last year. As such, we believe the stock’s strong fundamentals make it worthy of further research, even if the stock is now more “expensive” than it was previously.
Almost every company faces some kind of risk, so it’s worth knowing what they are. 2 warning signs for Edarat Communications and Information Technology (You can’t ignore that one!) You should know.
If you want to find more stocks with high returns, check this out. free This is a list of stocks with strong balance sheets and high return on equity.
Valuation is complex, but we help make it simple.
Check out our comprehensive analysis to see if Edarat Communications and Information Technology is potentially overvalued or undervalued. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.
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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.
