Tiger Brands (JSE:TBS) Struggles to Increase Its Returns

Tiger Brands (JSE:TBS) has been under the spotlight recently as investors analyze its potential for substantial growth. The key metric being scrutinized is the return on capital employed (ROCE), which indicates how efficiently a company is using its capital to generate profits.

Currently, Tiger Brands boasts an ROCE of 16%, which is higher than the industry average of 11%. While this is a satisfactory return, it may not be enough to excite investors looking for a multi-bagger opportunity. The company’s ROCE has remained relatively stable over the past five years, indicating a mature and steady operation.

Despite the stable returns, Tiger Brands is not reinvesting much in itself, as evidenced by the 59% of income being distributed to shareholders as dividends. This lack of reinvestment may explain why the total return to shareholders has been flat over the last five years.

Analysts are keeping a close eye on Tiger Brands to see if there will be any significant changes in its ROCE and investment strategies in the future. Without substantial growth in these areas, the company may not be able to achieve multi-bagger status.

Investors interested in solid companies with great earnings may want to explore other options, as Tiger Brands may not offer the explosive growth potential they are seeking. As always, it’s essential for investors to conduct thorough research and consider their own financial goals before making any investment decisions.