Returns On Capital At Swift Energy Technology Berhad (KLSE:SET) Have Hit The Brakes

What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a perfect world, we’d like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. However, after briefly looking over the numbers, we don’t think Swift Energy Technology Berhad (KLSE:SET) has the makings of a multi-bagger going forward, but let’s have a look at why that may be.

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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. Analysts use this formula to calculate it for Swift Energy Technology Berhad:

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

0.093 = RM14m ÷ (RM174m – RM26m) (Based on the trailing twelve months to September 2025).

So, Swift Energy Technology Berhad has an ROCE of 9.3%. On its own that’s a low return on capital but it’s in line with the industry’s average returns of 8.9%.

Check out our latest analysis for Swift Energy Technology Berhad

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you’d like to look at how Swift Energy Technology Berhad has performed in the past in other metrics, you can view this free graph of Swift Energy Technology Berhad’s past earnings, revenue and cash flow.

There are better returns on capital out there than what we’re seeing at Swift Energy Technology Berhad. Over the past four years, ROCE has remained relatively flat at around 9.3% and the business has deployed 192% more capital into its operations. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don’t provide a high return on capital.

One more thing to note, even though ROCE has remained relatively flat over the last four years, the reduction in current liabilities to 15% of total assets, is good to see from a business owner’s perspective. Effectively suppliers now fund less of the business, which can lower some elements of risk.

In conclusion, Swift Energy Technology Berhad has been investing more capital into the business, but returns on that capital haven’t increased. And in the last year, the stock has given away 50% so the market doesn’t look too hopeful on these trends strengthening any time soon. On the whole, we aren’t too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.

One more thing to note, we’ve identified 2 warning signs with Swift Energy Technology Berhad and understanding them should be part of your investment process.

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.

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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.