What are the early trends we should look for to identify a stock that could multiply in value over the long term? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. And in light of that, the trends we're seeing at Astra Industrial Group's (TADAWUL:1212) look very promising so lets take a look.

What Is Return On Capital Employed (ROCE)?

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 Astra Industrial Group, this is the formula:

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

0.23 = ر.س679m ÷ (ر.س4.7b - ر.س1.8b) (Based on the trailing twelve months to March 2025).

Thus, Astra Industrial Group has an ROCE of 23%. That's a fantastic return and not only that, it outpaces the average of 6.2% earned by companies in a similar industry.

Above you can see how the current ROCE for Astra Industrial Group 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 Astra Industrial Group .

The Trend Of ROCE

We like the trends that we're seeing from Astra Industrial Group. The data shows that returns on capital have increased substantially over the last five years to 23%. The amount of capital employed has increased too, by 86%. So we're very much inspired by what we're seeing at Astra Industrial Group thanks to its ability to profitably reinvest capital.

The Key Takeaway

To sum it up, Astra Industrial Group has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. In light of that, we think it's worth looking further into this stock because if Astra Industrial Group can keep these trends up, it could have a bright future ahead.

Like most companies, Astra Industrial Group does come with some risks, and we've found 1 warning sign that you should be aware of.

Astra Industrial Group 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.

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.