Returns Are Gaining Momentum At Fuji Oozx (TSE:7299)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Fuji Oozx's (TSE:7299) returns on capital, so let's have a look.

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

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. To calculate this metric for Fuji Oozx, this is the formula:

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

0.085 = JP¥2.7b ÷ (JP¥36b - JP¥4.6b) (Based on the trailing twelve months to June 2025).

Thus, Fuji Oozx has an ROCE of 8.5%. In absolute terms, that's a low return but it's around the Auto Components industry average of 7.6%.

View our latest analysis for Fuji Oozx

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Fuji Oozx has performed in the past in other metrics, you can view this free graph of Fuji Oozx's past earnings, revenue and cash flow.

The Trend Of ROCE

Fuji Oozx is showing promise given that its ROCE is trending up and to the right. The figures show that over the last five years, ROCE has grown 1,074% whilst employing roughly the same amount of capital. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

On a related note, the company's ratio of current liabilities to total assets has decreased to 13%, which basically reduces it's funding from the likes of short-term creditors or suppliers. So this improvement in ROCE has come from the business' underlying economics, which is great to see.

The Key Takeaway

As discussed above, Fuji Oozx appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. Since the stock has returned a staggering 358% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Fuji Oozx can keep these trends up, it could have a bright future ahead.

Like most companies, Fuji Oozx does come with some risks, and we've found 1 warning sign that you should be aware of.

While Fuji Oozx 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.