Juniper Hotels (NSE:JUNIPER) Is Experiencing Growth In Returns On Capital

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So on that note, Juniper Hotels (NSE:JUNIPER) looks quite promising in regards to its trends of return on capital.

What Is Return On Capital Employed (ROCE)?

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 Juniper Hotels:

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

0.055 = ₹2.1b ÷ (₹41b - ₹3.6b) (Based on the trailing twelve months to December 2024).

Thus, Juniper Hotels has an ROCE of 5.5%. Ultimately, that's a low return and it under-performs the Hospitality industry average of 8.6%.

View our latest analysis for Juniper Hotels

Above you can see how the current ROCE for Juniper Hotels compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Juniper Hotels .

So How Is Juniper Hotels' ROCE Trending?

The fact that Juniper Hotels is now generating some pre-tax profits from its prior investments is very encouraging. The company was generating losses three years ago, but now it's earning 5.5% which is a sight for sore eyes. In addition to that, Juniper Hotels is employing 34% more capital than previously which is expected of a company that's trying to break into profitability. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.

The Bottom Line

To the delight of most shareholders, Juniper Hotels has now broken into profitability. Given the stock has declined 42% in the last year, this could be a good investment if the valuation and other metrics are also appealing. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

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 JUNIPER that compares the share price and estimated value.

While Juniper Hotels 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.