Returns At Jahez International Company for Information Systems Technology (TADAWUL:9526) Are On The Way Up

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Amongst other things, we’ll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company’s amount of capital employed. If you see this, it typically means it’s a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, Jahez International Company for Information Systems Technology (TADAWUL:9526) looks quite promising in regards to its trends of return on capital.

Return On Capital Employed (ROCE): What Is It?

If you haven’t worked with ROCE before, it measures the ‘return’ (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Jahez International Company for Information Systems Technology, this is the formula:

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

0.058 = ر.س64m ÷ (ر.س1.4b – ر.س299m) (Based on the trailing twelve months to December 2022).

Thus, Jahez International Company for Information Systems Technology has an ROCE of 5.8%. Even though it’s in line with the industry average of 5.8%, it’s still a low return by itself.

Check out our latest analysis for Jahez International Company for Information Systems Technology

In the above chart we have measured Jahez International Company for Information Systems Technology’s prior ROCE against its prior performance, but the future is arguably more important. If you’d like to see what analysts are forecasting going forward, you should check out our free report for Jahez International Company for Information Systems Technology.

SWOT Analysis for Jahez International Company for Information Systems Technology

So How Is Jahez International Company for Information Systems Technology’s ROCE Trending?

Jahez International Company for Information Systems Technology has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses three years ago, but now it’s earning 5.8% which is a sight for sore eyes. And unsurprisingly, like most companies trying to break into the black, Jahez International Company for Information Systems Technology is utilizing 17,898% more capital than it was three years ago. This can indicate that there’s plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

On a related note, the company’s ratio of current liabilities to total assets has decreased to 21%, which basically reduces it’s funding from the likes of short-term creditors or suppliers. So shareholders would be pleased that the growth in returns has mostly come from underlying business performance.

The Key Takeaway

In summary, it’s great to see that Jahez International Company for Information Systems Technology has managed to break into profitability and is continuing to reinvest in its business. Astute investors may have an opportunity here because the stock has declined 32% in the last year. With that in mind, we believe the promising trends warrant this stock for further investigation.

Jahez International Company for Information Systems Technology does have some risks though, and we’ve spotted 2 warning signs for Jahez International Company for Information Systems Technology that you might be interested in.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.