Investors Will Want Lapidoth Capital's (TLV:LAPD) Growth In ROCE To Persist

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. With that in mind, we've noticed some promising trends at Lapidoth Capital (TLV:LAPD) so let's look a bit deeper.

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Understanding 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. Analysts use this formula to calculate it for Lapidoth Capital:

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

0.084 = ₪383m ÷ (₪8.5b - ₪4.0b) (Based on the trailing twelve months to June 2025).

Therefore, Lapidoth Capital has an ROCE of 8.4%. Even though it's in line with the industry average of 8.4%, it's still a low return by itself.

Check out our latest analysis for Lapidoth Capital

Historical performance is a great place to start when researching a stock so above you can see the gauge for Lapidoth Capital's ROCE against it's prior returns. If you'd like to look at how Lapidoth Capital has performed in the past in other metrics, you can view this free graph of Lapidoth Capital's past earnings, revenue and cash flow.

So How Is Lapidoth Capital's ROCE Trending?

Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. The data shows that returns on capital have increased substantially over the last five years to 8.4%. Basically the business is earning more per dollar of capital invested and in addition to that, 36% 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 separate but related note, it's important to know that Lapidoth Capital has a current liabilities to total assets ratio of 47%, which we'd consider pretty high. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

What We Can Learn From Lapidoth Capital's ROCE

To sum it up, Lapidoth Capital has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And a remarkable 176% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if Lapidoth Capital can keep these trends up, it could have a bright future ahead.

One more thing to note, we've identified 1 warning sign with Lapidoth Capital and understanding this should be part of your investment process.

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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.