Returns At MINEBEA MITSUMI (TSE:6479) Appear To Be Weighed Down

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. However, after investigating MINEBEA MITSUMI (TSE:6479), we don't think it's current trends fit the mold of a multi-bagger.

We've discovered 1 warning sign about MINEBEA MITSUMI. View them for free.

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

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 MINEBEA MITSUMI:

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

0.087 = JP¥95b ÷ (JP¥1.6t - JP¥489b) (Based on the trailing twelve months to December 2024).

So, MINEBEA MITSUMI has an ROCE of 8.7%. In absolute terms, that's a low return but it's around the Machinery industry average of 7.8%.

See our latest analysis for MINEBEA MITSUMI

In the above chart we have measured MINEBEA MITSUMI's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for MINEBEA MITSUMI .

The Trend Of ROCE

There are better returns on capital out there than what we're seeing at MINEBEA MITSUMI. Over the past five years, ROCE has remained relatively flat at around 8.7% and the business has deployed 83% more capital into its operations. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

What We Can Learn From MINEBEA MITSUMI's ROCE

Long story short, while MINEBEA MITSUMI has been reinvesting its capital, the returns that it's generating haven't increased. And with the stock having returned a mere 35% in the last five years to shareholders, you could argue that they're aware of these lackluster trends. As a result, if you're hunting for a multi-bagger, we think you'd have more luck elsewhere.

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

While MINEBEA MITSUMI 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.