WEBULL

The Returns On Capital At Shapir Engineering and Industry (TLV:SPEN) Don't Inspire Confidence

Simply Wall St · 5d ago

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. However, after investigating Shapir Engineering and Industry (TLV:SPEN), we don't think it's current trends fit the mold of a multi-bagger.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

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 Shapir Engineering and Industry:

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

0.034 = ₪428m ÷ (₪17b - ₪4.2b) (Based on the trailing twelve months to September 2025).

So, Shapir Engineering and Industry has an ROCE of 3.4%. Ultimately, that's a low return and it under-performs the Construction industry average of 7.6%.

View our latest analysis for Shapir Engineering and Industry

roce
TASE:SPEN Return on Capital Employed January 2nd 2026

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

So How Is Shapir Engineering and Industry's ROCE Trending?

On the surface, the trend of ROCE at Shapir Engineering and Industry doesn't inspire confidence. Over the last five years, returns on capital have decreased to 3.4% from 8.3% five years ago. Although, given both revenue and the amount of assets employed in the business have increased, it could suggest the company is investing in growth, and the extra capital has led to a short-term reduction in ROCE. If these investments prove successful, this can bode very well for long term stock performance.

In Conclusion...

In summary, despite lower returns in the short term, we're encouraged to see that Shapir Engineering and Industry is reinvesting for growth and has higher sales as a result. These trends are starting to be recognized by investors since the stock has delivered a 38% gain to shareholders who've held over the last five years. So this stock may still be an appealing investment opportunity, if other fundamentals prove to be sound.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for Shapir Engineering and Industry (of which 2 can't be ignored!) that you should know about.

While Shapir Engineering and Industry may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.