Elmos Semiconductor (ETR:ELG) Is Investing Its Capital With Increasing Efficiency

If you’re looking for a multi-bagger, there’s a few things to keep an eye out for. Firstly, we’d want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base 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. And in light of that, the trends we’re seeing at Elmos Semiconductor’s (ETR:ELG) look very promising so lets take a look.

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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 Elmos Semiconductor, this is the formula:

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

0.24 = €165m ÷ (€797m – €93m) (Based on the trailing twelve months to June 2025).

Therefore, Elmos Semiconductor has an ROCE of 24%. In absolute terms that’s a great return and it’s even better than the Semiconductor industry average of 17%.

Check out our latest analysis for Elmos Semiconductor

In the above chart we have measured Elmos Semiconductor’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 Elmos Semiconductor .

Elmos Semiconductor is displaying some positive trends. Over the last five years, returns on capital employed have risen substantially to 24%. Basically the business is earning more per dollar of capital invested and in addition to that, 95% more capital is being employed now too. This can indicate that there’s plenty of opportunities to invest capital internally and at ever higher rates, a combination that’s common among multi-baggers.

All in all, it’s terrific to see that Elmos Semiconductor is reaping the rewards from prior investments and is growing its capital base. And a remarkable 299% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it’s worth looking further into this stock because if Elmos Semiconductor can keep these trends up, it could have a bright future ahead.

Before jumping to any conclusions though, we need to know what value we’re getting for the current share price. That’s where you can check out our FREE intrinsic value estimation for ELG that compares the share price and estimated value.

Elmos Semiconductor is not the only stock earning high returns. If you’d like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.