Returns On Capital At Albaad Massuot Yitzhak (TLV:ALBA) Have Hit The Brakes

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. However, after investigating Albaad Massuot Yitzhak (TLV:ALBA), we don't think it's current trends fit the mold of a multi-bagger.

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What Is Return On Capital Employed (ROCE)?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Albaad Massuot Yitzhak is:

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

0.13 = ₪112m ÷ (₪1.6b - ₪670m) (Based on the trailing twelve months to March 2025).

Thus, Albaad Massuot Yitzhak has an ROCE of 13%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Household Products industry average of 11%.

View our latest analysis for Albaad Massuot Yitzhak

Historical performance is a great place to start when researching a stock so above you can see the gauge for Albaad Massuot Yitzhak's 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 Albaad Massuot Yitzhak.

What Does the ROCE Trend For Albaad Massuot Yitzhak Tell Us?

Over the past five years, Albaad Massuot Yitzhak's ROCE and capital employed have both remained mostly flat. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect Albaad Massuot Yitzhak to be a multi-bagger going forward.

On a side note, Albaad Massuot Yitzhak's current liabilities are still rather high at 43% of total assets. 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. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

The Bottom Line

We can conclude that in regards to Albaad Massuot Yitzhak's returns on capital employed and the trends, there isn't much change to report on. And investors appear hesitant that the trends will pick up because the stock has fallen 52% in the last five years. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.

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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.