Nantong Jianghai Capacitor (SZSE:002484) Is Doing The Right Things To Multiply Its Share Price

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Speaking of which, we noticed some great changes in Nantong Jianghai Capacitor's (SZSE:002484) returns on capital, so let's have a look.

Return On Capital Employed (ROCE): What Is It?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for Nantong Jianghai Capacitor:

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

0.12 = CN¥719m ÷ (CN¥7.4b - CN¥1.5b) (Based on the trailing twelve months to March 2024).

So, Nantong Jianghai Capacitor has an ROCE of 12%. On its own, that's a standard return, however it's much better than the 6.0% generated by the Electrical industry.

See our latest analysis for Nantong Jianghai Capacitor

Above you can see how the current ROCE for Nantong Jianghai Capacitor compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Nantong Jianghai Capacitor for free.

So How Is Nantong Jianghai Capacitor's ROCE Trending?

The trends we've noticed at Nantong Jianghai Capacitor are quite reassuring. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 12%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 67%. So we're very much inspired by what we're seeing at Nantong Jianghai Capacitor thanks to its ability to profitably reinvest capital.

The Key Takeaway

All in all, it's terrific to see that Nantong Jianghai Capacitor is reaping the rewards from prior investments and is growing its capital base. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 70% return over the last five years. In light of that, we think it's worth looking further into this stock because if Nantong Jianghai Capacitor can keep these trends up, it could have a bright future ahead.

On a final note, we've found 1 warning sign for Nantong Jianghai Capacitor that we think you should be aware of.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

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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.