Northern United Publishing & Media (Group) (SHSE:601999) Is Looking To Continue Growing Its Returns On Capital

There are a few key trends to look for if we want to identify the next multi-bagger. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base 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. So when we looked at Northern United Publishing & Media (Group) (SHSE:601999) and its trend of ROCE, we really liked what we saw.

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. The formula for this calculation on Northern United Publishing & Media (Group) is:

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

0.0085 = CN¥23m ÷ (CN¥4.4b - CN¥1.7b) (Based on the trailing twelve months to September 2024).

So, Northern United Publishing & Media (Group) has an ROCE of 0.9%. Ultimately, that's a low return and it under-performs the Media industry average of 5.2%.

See our latest analysis for Northern United Publishing & Media (Group)

Historical performance is a great place to start when researching a stock so above you can see the gauge for Northern United Publishing & Media (Group)'s ROCE against it's prior returns. If you're interested in investigating Northern United Publishing & Media (Group)'s past further, check out this free graph covering Northern United Publishing & Media (Group)'s past earnings, revenue and cash flow.

So How Is Northern United Publishing & Media (Group)'s ROCE Trending?

Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. The figures show that over the last five years, ROCE has grown 149% whilst employing roughly the same amount of capital. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

Our Take On Northern United Publishing & Media (Group)'s ROCE

To bring it all together, Northern United Publishing & Media (Group) has done well to increase the returns it's generating from its capital employed. Considering the stock has delivered 31% to its stockholders over the last five years, it may be fair to think that investors aren't fully aware of the promising trends yet. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

Northern United Publishing & Media (Group) does have some risks, we noticed 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

While Northern United Publishing & Media (Group) isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.