We Like Tigbur - Temporary Professional Personnel's (TLV:TIGBUR) Returns And Here's How They're Trending

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Speaking of which, we noticed some great changes in Tigbur - Temporary Professional Personnel's (TLV:TIGBUR) returns on capital, so let's have a look.

Understanding Return On Capital Employed (ROCE)

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 Tigbur - Temporary Professional Personnel:

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

0.23 = ₪34m ÷ (₪417m - ₪264m) (Based on the trailing twelve months to March 2022).

So, Tigbur - Temporary Professional Personnel has an ROCE of 23%. In absolute terms that's a great return and it's even better than the Professional Services industry average of 14%.

Check out our latest analysis for Tigbur - Temporary Professional Personnel

Historical performance is a great place to start when researching a stock so above you can see the gauge for Tigbur - Temporary Professional Personnel's ROCE against it's prior returns. If you're interested in investigating Tigbur - Temporary Professional Personnel's past further, check out this free graph of past earnings, revenue and cash flow.

The Trend Of ROCE

Tigbur - Temporary Professional Personnel is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 23%. Basically the business is earning more per dollar of capital invested and in addition to that, 48% more capital is being employed now too. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

On a side note, Tigbur - Temporary Professional Personnel's current liabilities are still rather high at 63% of total assets. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

What We Can Learn From Tigbur - Temporary Professional Personnel's ROCE

In summary, it's great to see that Tigbur - Temporary Professional Personnel can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. Since the stock has returned a staggering 457% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue.

On a final note, we found 3 warning signs for Tigbur - Temporary Professional Personnel (1 shouldn't be ignored) you should be aware of.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning 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.