Shareholders Are Optimistic That Neto M.E Holdings (TLV:NTO) Will Multiply In Value

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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. With that in mind, the ROCE of Neto M.E Holdings (TLV:NTO) looks attractive right now, so lets see what the trend of returns can tell us.

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Return On Capital Employed (ROCE): What Is It?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Neto M.E Holdings, this is the formula:

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

0.23 = ₪312m ÷ (₪2.2b - ₪835m) (Based on the trailing twelve months to June 2025).

Thus, Neto M.E Holdings has an ROCE of 23%. In absolute terms that's a very respectable return and compared to the Food industry average of 21% it's pretty much on par.

See our latest analysis for Neto M.E Holdings

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

So How Is Neto M.E Holdings' ROCE Trending?

It's hard not to be impressed by Neto M.E Holdings' returns on capital. Over the past five years, ROCE has remained relatively flat at around 23% and the business has deployed 50% more capital into its operations. With returns that high, it's great that the business can continually reinvest its money at such appealing rates of return. If Neto M.E Holdings can keep this up, we'd be very optimistic about its future.

The Bottom Line On Neto M.E Holdings' ROCE

In the end, the company has proven it can reinvest it's capital at high rates of returns, which you'll remember is a trait of a multi-bagger. On top of that, the stock has rewarded shareholders with a remarkable 145% return to those who've held over the last five years. So while the positive underlying trends may be accounted for by investors, we still think this stock is worth looking into further.

Neto M.E Holdings does have some risks though, and we've spotted 1 warning sign for Neto M.E Holdings that you might be interested in.

Neto M.E Holdings is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.