Al Rashid Industrial (TADAWUL:9580) Is Investing Its Capital With Increasing Efficiency

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at the ROCE trend of Al Rashid Industrial (TADAWUL:9580) we really liked what we saw.

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

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Al Rashid Industrial:

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

0.23 = ر.س39m ÷ (ر.س187m - ر.س17m) (Based on the trailing twelve months to June 2025).

So, Al Rashid Industrial has an ROCE of 23%. In absolute terms that's a great return and it's even better than the Packaging industry average of 14%.

View our latest analysis for Al Rashid Industrial

Historical performance is a great place to start when researching a stock so above you can see the gauge for Al Rashid Industrial's ROCE against it's prior returns. If you're interested in investigating Al Rashid Industrial's past further, check out this free graph covering Al Rashid Industrial's past earnings, revenue and cash flow.

What Does the ROCE Trend For Al Rashid Industrial Tell Us?

Al Rashid Industrial is displaying some positive trends. Over the last four years, returns on capital employed have risen substantially to 23%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 83%. So we're very much inspired by what we're seeing at Al Rashid Industrial thanks to its ability to profitably reinvest capital.

In Conclusion...

In summary, it's great to see that Al Rashid Industrial can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with a respectable 20% awarded to those who held the stock over the last year, you could argue that these developments are starting to get the attention they deserve. Therefore, we think it would be worth your time to check if these trends are going to continue.

If you want to continue researching Al Rashid Industrial, you might be interested to know about the 1 warning sign that our analysis has discovered.

Al Rashid Industrial is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.