Investors Will Want Electra Consumer Products (1970)'s (TLV:ECP) Growth In ROCE To Persist

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing 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. Speaking of which, we noticed some great changes in Electra Consumer Products (1970)'s (TLV:ECP) 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. The formula for this calculation on Electra Consumer Products (1970) is:

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

0.079 = ₪354m ÷ (₪8.1b - ₪3.6b) (Based on the trailing twelve months to June 2025).

So, Electra Consumer Products (1970) has an ROCE of 7.9%. On its own that's a low return on capital but it's in line with the industry's average returns of 7.9%.

View our latest analysis for Electra Consumer Products (1970)

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Electra Consumer Products (1970) has performed in the past in other metrics, you can view this free graph of Electra Consumer Products (1970)'s past earnings, revenue and cash flow.

The Trend Of ROCE

We're delighted to see that Electra Consumer Products (1970) is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses five years ago, but now it's earning 7.9% which is a sight for sore eyes. Not only that, but the company is utilizing 177% more capital than before, but that's to be expected from a company trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

On a side note, Electra Consumer Products (1970)'s current liabilities are still rather high at 44% 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. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

The Bottom Line On Electra Consumer Products (1970)'s ROCE

Long story short, we're delighted to see that Electra Consumer Products (1970)'s reinvestment activities have paid off and the company is now profitable. Since the stock has only returned 19% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So with that in mind, we think the stock deserves further research.

Electra Consumer Products (1970) does have some risks, we noticed 3 warning signs (and 2 which can't be ignored) we think you should know about.

While Electra Consumer Products (1970) isn't earning the highest return, check out this free list of companies that are 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.