Capital's (LON:CAPD) 53% Return: A Closer Look at the Company's Success

Capital Limited (LON:CAPD) investors have much to celebrate, with the company delivering a notable 53% return over the last five years. This impressive performance is testament to Capital's strategic approach to growth and value creation. In this article, we delve into the factors that have contributed to Capital's remarkable success and explore what lies ahead for this dynamic mining support services provider.

Capital's core business of providing drilling solutions to the minerals industry has been a key driver of its growth. The company has consistently increased its revenue, with a compound annual growth rate (CAGR) of 17.54% over the past five years. This growth is underpinned by Capital's expansion into new markets and regions, as well as its diversification into new service offerings. The company's strategic investments in mineral geochemical analysis and grade control drilling services have further enhanced its margins and solidified its position in the industry.



In addition to its organic growth, Capital has bolstered its performance through strategic acquisitions and partnerships. The company's stake in WIA Gold, worth approximately £16.1 million at current A$0.13, has added significant value to its portfolio. Moreover, Capital's partnership with Sanu Gold has led to the commencement of drilling at the Daina Gold operations in Guinea, potentially unlocking new value for shareholders. These strategic moves demonstrate Capital's commitment to growing its portfolio and creating shareholder value.

Capital's financial management and cost control have also played a pivotal role in its success. The company has maintained a strong balance sheet, with a debt-to-equity ratio of 0.57 and a current ratio of 1.98, indicating a healthy financial position. Capital's effective management of costs and operational efficiency has contributed to its impressive 15.05% return on equity (ROE) in 2023, up from 7.5% in 2019.



Capital's dividend policy and shareholder return have also been a source of strength for the company. With a dividend yield of 1.85% and a total shareholder return (TSR) of 2.62% annually over the past five years, Capital has outperformed its peers in the mining support services sector. This commitment to shareholder value has further enhanced the company's appeal to investors.

As Capital continues to deliver robust earnings and cash flows, investors can expect further growth in its market valuation and financial ratios. The company's P/E ratio, which has fluctuated between 7.19 and 11.43 over the past five years, reflects investors' growing confidence in its future earnings potential. Similarly, the EV/EBITDA ratio, which provides a more comprehensive view of the company's valuation, has evolved from 2.89 in 2019 to 3.80 in 2023, indicating investors' willingness to pay a premium for Capital's earnings and cash flows.

In conclusion, Capital's (LON:CAPD) investors have benefited from the company's strategic approach to growth, effective cost management, and strong financial performance. As Capital continues to expand its portfolio, optimize its operations, and deliver value to shareholders, investors can expect the company to maintain its impressive track record of growth and success.