Jesco Holdings (TSE:1434) Might Have The Makings Of A Multi-Bagger

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So on that note, Jesco Holdings (TSE:1434) looks quite promising in regards to its trends of return on capital.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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 Jesco Holdings:

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

0.12 = JP¥1.7b ÷ (JP¥19b - JP¥5.6b) (Based on the trailing twelve months to May 2025).

Thus, Jesco Holdings has an ROCE of 12%. On its own, that's a standard return, however it's much better than the 9.8% generated by the Construction industry.

View our latest analysis for Jesco Holdings

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

The Trend Of ROCE

Jesco Holdings is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 12%. The amount of capital employed has increased too, by 109%. So we're very much inspired by what we're seeing at Jesco Holdings thanks to its ability to profitably reinvest capital.

Our Take On Jesco Holdings' ROCE

To sum it up, Jesco Holdings has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And a remarkable 161% 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 Jesco Holdings can keep these trends up, it could have a bright future ahead.

If you want to know some of the risks facing Jesco Holdings we've found 5 warning signs (1 is significant!) that you should be aware of before investing here.

While Jesco Holdings may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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.