Returns On Capital At Bezeq The Israel Telecommunication (TLV:BEZQ) Have Hit The Brakes

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. 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. However, after briefly looking over the numbers, we don't think Bezeq The Israel Telecommunication (TLV:BEZQ) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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Understanding Return On Capital Employed (ROCE)

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Bezeq The Israel Telecommunication:

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

0.17 = ₪2.0b ÷ (₪16b - ₪4.0b) (Based on the trailing twelve months to March 2025).

Thus, Bezeq The Israel Telecommunication has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 11% generated by the Telecom industry.

Check out our latest analysis for Bezeq The Israel Telecommunication

In the above chart we have measured Bezeq The Israel Telecommunication's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Bezeq The Israel Telecommunication .

What Can We Tell From Bezeq The Israel Telecommunication's ROCE Trend?

There hasn't been much to report for Bezeq The Israel Telecommunication's returns and its level of capital employed because both metrics have been steady for the past five years. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. So unless we see a substantial change at Bezeq The Israel Telecommunication in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger.

The Bottom Line On Bezeq The Israel Telecommunication's ROCE

In summary, Bezeq The Israel Telecommunication isn't compounding its earnings but is generating stable returns on the same amount of capital employed. Yet to long term shareholders the stock has gifted them an incredible 106% return in the last five years, so the market appears to be rosy about its future. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

Like most companies, Bezeq The Israel Telecommunication does come with some risks, and we've found 2 warning signs that you should be aware of.

While Bezeq The Israel Telecommunication 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.