CAB Cakaran Corporation Berhad (KLSE:CAB) Could Become A Multi-Bagger
What trends should we look for it we want to identify stocks that can multiply in value over the long term? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, the ROCE of CAB Cakaran Corporation Berhad (KLSE:CAB) looks great, so lets see what the trend can tell us.
Return On Capital Employed (ROCE): What Is It?
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for CAB Cakaran Corporation Berhad:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.20 = RM213m ÷ (RM1.6b - RM519m) (Based on the trailing twelve months to December 2023).
So, CAB Cakaran Corporation Berhad has an ROCE of 20%. That's a fantastic return and not only that, it outpaces the average of 6.9% earned by companies in a similar industry.
Check out our latest analysis for CAB Cakaran Corporation Berhad
Historical performance is a great place to start when researching a stock so above you can see the gauge for CAB Cakaran Corporation Berhad's ROCE against it's prior returns. If you're interested in investigating CAB Cakaran Corporation Berhad's past further, check out this free graph covering CAB Cakaran Corporation Berhad's past earnings, revenue and cash flow.
The Trend Of ROCE
Investors would be pleased with what's happening at CAB Cakaran Corporation Berhad. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 20%. 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 23%. So we're very much inspired by what we're seeing at CAB Cakaran Corporation Berhad thanks to its ability to profitably reinvest capital.
The Bottom Line
A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what CAB Cakaran Corporation Berhad has. Since the stock has only returned 27% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So with that in mind, we think the stock deserves further research.
While CAB Cakaran Corporation Berhad looks impressive, no company is worth an infinite price. The intrinsic value infographic for CAB helps visualize whether it is currently trading for a fair price.
CAB Cakaran Corporation Berhad 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.