Astra Industrial Group (TADAWUL:1212)’s high earnings trend is of great interest to us

If you want to find stocks with long-term growth potential, what trends should you look for? return Return on Invested Capital (ROCE) is increasing, and secondly, base This shows that the company is a compounding machine and can continually reinvest profits back into the business to generate higher returns. Astra Industrial Group (TADAWUL:1212) We really liked what we saw.

Understanding Return on Invested Capital (ROCE)

For those who don’t know, ROCE is the ratio of a company’s annual pre-tax profit (revenue) to the capital employed in the business: The formula to calculate this metric for Astra Industrial Group is:

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

0.22 = 6.561m ÷ (4.3b – 1.8b) (Based on the trailing 12 months ending March 2024).

therefore, Astra Industrial Group has an ROCE of 22%. Not only is this an excellent return, but it’s also higher than the average return of 6.5% earned by companies in a similar industry.

Check out our latest analysis for Astra Industrial Group

The graph above compares Astra Industrial Group’s historical ROCE with its past performance, but arguably the future is more important – if you’d like, you can see forecasts from the analysts covering Astra Industrial Group. free.

ROCE Trends

Investors will be pleased with where Astra Industrial Group is. Over the past five years, return on invested capital has increased substantially to 22%. It’s worth noting that the company has substantially increased earnings per dollar of invested capital, and the amount of capital has also increased by 108%. This means there is ample opportunity to invest capital internally, and at higher rates, a combination that is common in multi-baggers.

Another part of the analysis shows that the company’s current liabilities to total assets ratio has decreased to 41%, which roughly means that it is less reliant on suppliers and short-term creditors to fund its operations. Therefore, shareholders will be pleased to see that the increase in earnings is mainly due to the underlying business performance. That said, there are some potential risks the company is exposed to with such high current liabilities, so keep them in mind.

Conclusion

In summary, it’s great to see Astra Industrial Group being able to compound by continually reinvesting capital to increase returns, as this is part of the key ingredients of a highly popular multi-bagger. This stock has also performed very well over the past five years, and investors are taking these patterns into account. With that in mind, I think it’s worth investigating this stock further, because if Astra Industrial Group can maintain these trends, it could have a bright future ahead of it.

But before jumping to any conclusions, we need to know what value we’re getting at the current share price. Free estimate of the intrinsic value of 1212 Compare the stock price to the estimated value.

Astra Industrial Group isn’t the only stock enjoying strong returns. free A list of companies with solid fundamentals and high return on equity.

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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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