A Look Into Danel (Adir Yeoshua)'s (TLV:DANE) Impressive Returns On Capital

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, the ROCE of Danel (Adir Yeoshua) (TLV:DANE) looks attractive right now, so lets see what the trend of returns can tell us.

Return On Capital Employed (ROCE): What is it?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Danel (Adir Yeoshua) is:

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

0.32 = ₪224m ÷ (₪1.1b - ₪393m) (Based on the trailing twelve months to September 2021).

Thus, Danel (Adir Yeoshua) has an ROCE of 32%. In absolute terms that's a great return and it's even better than the Professional Services industry average of 15%.

View our latest analysis for Danel (Adir Yeoshua)

Historical performance is a great place to start when researching a stock so above you can see the gauge for Danel (Adir Yeoshua)'s ROCE against it's prior returns. If you want to delve into the historical earnings, revenue and cash flow of Danel (Adir Yeoshua), check out these free graphs here.

The Trend Of ROCE

We'd be pretty happy with returns on capital like Danel (Adir Yeoshua). The company has consistently earned 32% for the last five years, and the capital employed within the business has risen 217% in that time. Now considering ROCE is an attractive 32%, this combination is actually pretty appealing because it means the business can consistently put money to work and generate these high returns. You'll see this when looking at well operated businesses or favorable business models.

Our Take On Danel (Adir Yeoshua)'s ROCE

Danel (Adir Yeoshua) has demonstrated its proficiency by generating high returns on increasing amounts of capital employed, which we're thrilled about. And long term investors would be thrilled with the 405% return they've received over the last five years. So even though the stock might be more "expensive" than it was before, we think the strong fundamentals warrant this stock for further research.

If you'd like to know about the risks facing Danel (Adir Yeoshua), we've discovered 1 warning sign that you should be aware of.

High returns are a key ingredient to strong performance, so check out our free list ofstocks earning high returns on equity with solid balance sheets.

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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.