Why The 22% Return On Capital At Danya Cebus (TLV:DNYA) Should Have Your Attention

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Speaking of which, we noticed some great changes in Danya Cebus' (TLV:DNYA) returns on capital, so let's have a look.

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What Is Return On Capital Employed (ROCE)?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. To calculate this metric for Danya Cebus, this is the formula:

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

0.22 = ₪192m ÷ (₪2.7b - ₪1.8b) (Based on the trailing twelve months to March 2025).

Thus, Danya Cebus has an ROCE of 22%. In absolute terms that's a great return and it's even better than the Consumer Durables industry average of 9.0%.

See our latest analysis for Danya Cebus

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

What Does the ROCE Trend For Danya Cebus Tell Us?

We're pretty happy with how the ROCE has been trending at Danya Cebus. The figures show that over the last five years, returns on capital have grown by 526%. The company is now earning ₪0.2 per dollar of capital employed. Speaking of capital employed, the company is actually utilizing 65% less than it was five years ago, which can be indicative of a business that's improving its efficiency. If this trend continues, the business might be getting more efficient but it's shrinking in terms of total assets.

On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities. Effectively this means that suppliers or short-term creditors are now funding 68% of the business, which is more than it was five years ago. Given it's pretty high ratio, we'd remind investors that having current liabilities at those levels can bring about some risks in certain businesses.

The Bottom Line On Danya Cebus' ROCE

In a nutshell, we're pleased to see that Danya Cebus has been able to generate higher returns from less capital. And with a respectable 72% awarded to those who held the stock over the last three years, you could argue that these developments are starting to get the attention they deserve. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

One more thing: We've identified 3 warning signs with Danya Cebus (at least 2 which shouldn't be ignored) , and understanding them would certainly be useful.

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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.