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Returns On Capital Are Showing Encouraging Signs At Scope Metals Group (TLV:SCOP)

Simply Wall St · 3d ago

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing 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. Speaking of which, we noticed some great changes in Scope Metals Group's (TLV:SCOP) returns on capital, so let's have a look.

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What Is 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. To calculate this metric for Scope Metals Group, this is the formula:

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

0.12 = ₪226m ÷ (₪2.5b - ₪525m) (Based on the trailing twelve months to September 2025).

So, Scope Metals Group has an ROCE of 12%. In absolute terms, that's a satisfactory return, but compared to the Trade Distributors industry average of 7.5% it's much better.

See our latest analysis for Scope Metals Group

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

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Scope Metals Group.

What Can We Tell From Scope Metals Group's ROCE Trend?

The trends we've noticed at Scope Metals Group are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 12%. The amount of capital employed has increased too, by 67%. So we're very much inspired by what we're seeing at Scope Metals Group thanks to its ability to profitably reinvest capital.

The Bottom Line On Scope Metals Group's ROCE

In summary, it's great to see that Scope Metals Group can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. Since the stock has returned a staggering 216% to shareholders over the last five years, it looks like investors are recognizing these changes. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

If you'd like to know about the risks facing Scope Metals Group, we've discovered 1 warning sign that you should be aware of.

While Scope Metals Group 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.