The Return Trends At Modiin Energy-Limited Partnership (TLV:MDIN) Look Promising

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should 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 Modiin Energy-Limited Partnership's (TLV:MDIN) returns on capital, so let's have a look.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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. Analysts use this formula to calculate it for Modiin Energy-Limited Partnership:

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

0.038 = US$4.2m ÷ (US$126m - US$14m) (Based on the trailing twelve months to March 2025).

Therefore, Modiin Energy-Limited Partnership has an ROCE of 3.8%. Ultimately, that's a low return and it under-performs the Oil and Gas industry average of 8.5%.

Check out our latest analysis for Modiin Energy-Limited Partnership

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

The Trend Of ROCE

We're glad to see that ROCE is heading in the right direction, even if it is still low at the moment. Over the last five years, returns on capital employed have risen substantially to 3.8%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 634%. So we're very much inspired by what we're seeing at Modiin Energy-Limited Partnership thanks to its ability to profitably reinvest capital.

In Conclusion...

To sum it up, Modiin Energy-Limited Partnership has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And since the stock has fallen 62% over the last five years, there might be an opportunity here. So researching this company further and determining whether or not these trends will continue seems justified.

Modiin Energy-Limited Partnership does come with some risks though, we found 3 warning signs in our investment analysis, and 1 of those is a bit unpleasant...

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.