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Investors Could Be Concerned With Netanel Group's (TLV:NTGR) Returns On Capital

Simply Wall St · 5d ago

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Having said that, from a first glance at Netanel Group (TLV:NTGR) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

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Understanding Return On Capital Employed (ROCE)

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 Netanel Group, this is the formula:

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

0.023 = ₪18m ÷ (₪1.9b - ₪1.1b) (Based on the trailing twelve months to September 2025).

Therefore, Netanel Group has an ROCE of 2.3%. Ultimately, that's a low return and it under-performs the Consumer Durables industry average of 8.0%.

Check out our latest analysis for Netanel Group

roce
TASE:NTGR Return on Capital Employed January 7th 2026

Historical performance is a great place to start when researching a stock so above you can see the gauge for Netanel Group'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 Netanel Group.

So How Is Netanel Group's ROCE Trending?

When we looked at the ROCE trend at Netanel Group, we didn't gain much confidence. Around five years ago the returns on capital were 6.9%, but since then they've fallen to 2.3%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.

While on the subject, we noticed that the ratio of current liabilities to total assets has risen to 58%, which has impacted the ROCE. Without this increase, it's likely that ROCE would be even lower than 2.3%. What this means is that in reality, a rather large portion of the business is being funded by the likes of the company's suppliers or short-term creditors, which can bring some risks of its own.

What We Can Learn From Netanel Group's ROCE

While returns have fallen for Netanel Group in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. And the stock has done incredibly well with a 175% return over the last five years, so long term investors are no doubt ecstatic with that result. So should these growth trends continue, we'd be optimistic on the stock going forward.

Netanel Group does have some risks though, and we've spotted 2 warning signs for Netanel Group that you might be interested in.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.