UMS Holdings Berhad, a company listed on the Kuala Lumpur Stock Exchange, may not be the best bet for investors looking for stocks that can multiply in value over the long term. A recent analysis of the company’s Return On Capital Employed (ROCE) and capital employed trends suggests that it may not be a multi-bagger in the making.
ROCE is a key metric used to evaluate a company’s profitability and efficiency in utilizing its capital. UMS Holdings Berhad currently has an ROCE of 11%, which is in line with the industry average of 10%. However, over the past five years, both the company’s ROCE and capital employed have remained relatively flat, indicating a lack of significant reinvestment in the business.
This stagnant trend suggests that UMS Holdings Berhad may have already reached its growth phase and is not actively seeking profitable reinvestment opportunities. As a result, the stock has only returned 29% to shareholders in the last five years, further reinforcing the notion that it may not be a multi-bagger in the making.
Investors interested in UMS Holdings Berhad are advised to proceed with caution and consider exploring other companies with higher returns on equity. While the company may not currently offer the highest returns, there are other options available for investors seeking long-term growth opportunities.