02-04-2025
Investors Shouldn't Overlook Dayang Enterprise Holdings Bhd's (KLSE:DAYANG) Impressive Returns On Capital
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base 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. And in light of that, the trends we're seeing at Dayang Enterprise Holdings Bhd's (KLSE:DAYANG) look very promising so lets take a look.
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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 Dayang Enterprise Holdings Bhd, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.22 = RM485m ÷ (RM2.7b - RM486m) (Based on the trailing twelve months to December 2024).
So, Dayang Enterprise Holdings Bhd has an ROCE of 22%. That's a fantastic return and not only that, it outpaces the average of 13% earned by companies in a similar industry.
View our latest analysis for Dayang Enterprise Holdings Bhd
Above you can see how the current ROCE for Dayang Enterprise Holdings Bhd compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Dayang Enterprise Holdings Bhd .
Dayang Enterprise Holdings Bhd's ROCE growth is quite impressive. More specifically, while the company has kept capital employed relatively flat over the last five years, the ROCE has climbed 47% in that same time. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.
To bring it all together, Dayang Enterprise Holdings Bhd has done well to increase the returns it's generating from its capital employed. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 58% return over the last five years. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.
On a final note, we've found 2 warning signs for Dayang Enterprise Holdings Bhd that we think you should be aware of.
Dayang Enterprise Holdings Bhd 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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