• Tue. Sep 27th, 2022

Dr. Sulaiman Al Habib (TADAWUL:4013) Medical Services Group Return Trends Are Not Attractive

ByMadeleine J. Pierce

Mar 7, 2022

What are the early trends to look for to identify a stock that could multiply in value over the long term? Among other things, we will want to see two things; first, growth come back on capital employed (ROCE) and on the other hand, an expansion of the amount capital employed. If you see this, it usually means it’s a company with a great business model and lots of profitable reinvestment opportunities. So when we ran our eyes Dr. Sulaiman Al Habib Medical Services Group (TADAWUL:4013) ROCE trend, we liked what we saw.

What is return on capital employed (ROCE)?

Just to clarify if you’re not sure, ROCE is a measure of the pre-tax income (as a percentage) that a business earns on the capital invested in its business. To calculate this metric for Dr. Sulaiman Al Habib Medical Services Group, here is the formula:

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

0.17 = ر.س1.5b ÷ (ر.س11b – ر.س2.0b) (Based on the last twelve months to December 2021).

Thereby, Dr. Sulaiman Al Habib Medical Services Group has a ROCE of 17%. In absolute terms, that’s a decent return, but compared to the healthcare industry average of 11%, it’s much better.

See our latest analysis for Dr. Sulaiman Al Habib Medical Services Group

SASE:4013 Return on capital employed March 7, 2022

In the table above, we have measured the past ROCE of Dr. Sulaiman Al Habib Medical Services Group against its past performance, but the future is arguably more important. If you’re interested, you can check out analyst forecasts in our free analyst forecast report for the company.

What does the ROCE trend of Dr. Sulaiman Al Habib Medical Services Group tell us?

Although capital returns are good, they haven’t changed much. Over the past five years, ROCE has remained relatively stable at around 17% and the company has deployed 59% more capital into its operations. Since 17% is a moderate ROCE, it’s good to see that a company can continue to reinvest at these decent rates of return. Over long periods of time, returns like these may not be too exciting, but with consistency they can pay off in terms of stock price performance.

In conclusion…

To sum up, Dr. Sulaiman Al Habib Medical Services Group has simply reinvested capital on a regular basis, at these decent rates of return. So it’s no surprise that shareholders have earned a respectable 47% return if they’ve held over the past year. So while investors seem to recognize these promising trends, we still think the stock merits further research.

Dr. Sulaiman Al Habib Medical Services Group could be trading at an attractive price in other respects, so you might find our free estimate of intrinsic value on our utterly valuable platform.

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

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.