The Trend Of High Returns At Jiayou International LogisticsLtd (SHSE:603871) Has Us Very Interested

There are a few key trends to look for if we want to identify the next multi-bagger. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at the ROCE trend of Jiayou International LogisticsLtd (SHSE:603871) we really liked what we saw.

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

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. Analysts use this formula to calculate it for Jiayou International LogisticsLtd:

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

0.27 = CN¥1.6b ÷ (CN¥8.2b - CN¥2.4b) (Based on the trailing twelve months to September 2024).

Thus, Jiayou International LogisticsLtd has an ROCE of 27%. In absolute terms that's a great return and it's even better than the Logistics industry average of 7.5%.

See our latest analysis for Jiayou International LogisticsLtd

In the above chart we have measured Jiayou International LogisticsLtd'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 Jiayou International LogisticsLtd .

What The Trend Of ROCE Can Tell Us

Jiayou International LogisticsLtd is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 27%. 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 212%. So we're very much inspired by what we're seeing at Jiayou International LogisticsLtd thanks to its ability to profitably reinvest capital.

Our Take On Jiayou International LogisticsLtd's ROCE

In summary, it's great to see that Jiayou International LogisticsLtd 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. And a remarkable 330% 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 Jiayou International LogisticsLtd can keep these trends up, it could have a bright future ahead.

One final note, you should learn about the 2 warning signs we've spotted with Jiayou International LogisticsLtd (including 1 which is significant) .

Jiayou International LogisticsLtd 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.