The Returns On Capital At Overseas Education (SGX:RQ1) Don’t Inspire Confidence

Simply Wall St

Tue, February 10, 2026 at 3:31 PM GMT+9 3 min read

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RQ1.SI

-1.11%

When we’re researching a company, it’s sometimes hard to find the warning signs, but there are some financial metrics that can help spot trouble early. More often than not, we’ll see a declining return on capital employed (ROCE) and a declining amount of capital employed. This indicates to us that the business is not only shrinking the size of its net assets, but its returns are falling as well. In light of that, from a first glance at Overseas Education (SGX:RQ1), we’ve spotted some signs that it could be struggling, so let’s investigate.

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Understanding Return On Capital Employed (ROCE)

Just to clarify if you’re unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Overseas Education, this is the formula:

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

0.041 = S$8.9m ÷ (S$247m - S$31m) (Based on the trailing twelve months to June 2025).

Thus, **Overseas Education has an ROCE of 4.1%. ** Ultimately, that’s a low return and it under-performs the Consumer Services industry average of 11%.

Check out our latest analysis for Overseas Education

SGX:RQ1 Return on Capital Employed February 10th 2026

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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Overseas Education.

The Trend Of ROCE

There is reason to be cautious about Overseas Education, given the returns are trending downwards. To be more specific, the ROCE was 6.7% five years ago, but since then it has dropped noticeably. On top of that, it’s worth noting that the amount of capital employed within the business has remained relatively steady. Since returns are falling and the business has the same amount of assets employed, this can suggest it’s a mature business that hasn’t had much growth in the last five years. So because these trends aren’t typically conducive to creating a multi-bagger, we wouldn’t hold our breath on Overseas Education becoming one if things continue as they have.

The Key Takeaway

All in all, the lower returns from the same amount of capital employed aren’t exactly signs of a compounding machine. Investors haven’t taken kindly to these developments, since the stock has declined 20% from where it was five years ago. With underlying trends that aren’t great in these areas, we’d consider looking elsewhere.

Story continues  

Since virtually every company faces some risks, it’s worth knowing what they are, and we’ve spotted ** 4 warning signs for Overseas Education ** (of which 1 is potentially serious!) that you should know about.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

Have feedback on this article? Concerned about the content? Get in touch** with us directly.**_ Alternatively, email editorial-team (at) simplywallst.com._

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.

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