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To avoid investing in a business that may be in decline, there are several financial metrics that can provide early indications. One such metric is the return on capital employed (ROCE), which measures the amount of pre-tax profits a company can generate from its capital. When analyzing Singapore Telecommunications (SGX:Z74), we have noticed some signs that it could be struggling.

The ROCE for Singapore Telecommunications is 2.9%, which is lower than the industry average of 11%. This indicates that the company is not compounding shareholder wealth effectively. Additionally, over the past five years, the ROCE has been declining from 7.0% to its current level. This, coupled with a relatively steady base of capital employed, suggests that the company may not have experienced much growth during this period.

Considering these trends, it is unlikely that Singapore Telecommunications will experience significant growth in the future. Moreover, the stock has remained flat over the past five years, indicating that investors are not optimistic about its prospects. Unless there is a change in the underlying trends, it may be prudent to explore other investment opportunities.

Please note that this article is for informational purposes only and should not be considered as financial advice. It is important to conduct thorough research and consider your own financial situation before making any investment decisions.

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