WEBULL

Shatirah House Restaurant (TADAWUL:6016) Might Be Having Difficulty Using Its Capital Effectively

Simply Wall St · 6d ago

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, 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. However, after investigating Shatirah House Restaurant (TADAWUL:6016), we don't think it's current trends fit the mold of a multi-bagger.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

What Is Return On Capital Employed (ROCE)?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on Shatirah House Restaurant is:

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

0.068 = ر.س8.4m ÷ (ر.س180m - ر.س56m) (Based on the trailing twelve months to September 2025).

So, Shatirah House Restaurant has an ROCE of 6.8%. Ultimately, that's a low return and it under-performs the Hospitality industry average of 9.0%.

Check out our latest analysis for Shatirah House Restaurant

roce
SASE:6016 Return on Capital Employed January 7th 2026

Historical performance is a great place to start when researching a stock so above you can see the gauge for Shatirah House Restaurant's ROCE against it's prior returns. If you'd like to look at how Shatirah House Restaurant has performed in the past in other metrics, you can view this free graph of Shatirah House Restaurant's past earnings, revenue and cash flow.

How Are Returns Trending?

When we looked at the ROCE trend at Shatirah House Restaurant, we didn't gain much confidence. Over the last five years, returns on capital have decreased to 6.8% from 27% five years ago. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. If these investments prove successful, this can bode very well for long term stock performance.

What We Can Learn From Shatirah House Restaurant's ROCE

While returns have fallen for Shatirah House Restaurant in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. Furthermore the stock has climbed 71% over the last three years, it would appear that investors are upbeat about the future. So while the underlying trends could already be accounted for by investors, we still think this stock is worth looking into further.

If you'd like to know more about Shatirah House Restaurant, we've spotted 2 warning signs, and 1 of them makes us a bit uncomfortable.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.