We Like These Underlying Return On Capital Trends At Mitsubishi Logisnext (TSE:7105)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So on that note, Mitsubishi Logisnext (TSE:7105) looks quite promising in regards to its trends of return on capital.

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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 Mitsubishi Logisnext:

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

0.062 = JP¥20b ÷ (JP¥500b - JP¥181b) (Based on the trailing twelve months to June 2025).

Thus, Mitsubishi Logisnext has an ROCE of 6.2%. Ultimately, that's a low return and it under-performs the Machinery industry average of 8.5%.

Check out our latest analysis for Mitsubishi Logisnext

Historical performance is a great place to start when researching a stock so above you can see the gauge for Mitsubishi Logisnext's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Mitsubishi Logisnext.

So How Is Mitsubishi Logisnext's ROCE Trending?

While in absolute terms it isn't a high ROCE, it's promising to see that it has been moving in the right direction. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 6.2%. The amount of capital employed has increased too, by 47%. So we're very much inspired by what we're seeing at Mitsubishi Logisnext thanks to its ability to profitably reinvest capital.

The Bottom Line

In summary, it's great to see that Mitsubishi Logisnext 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. Since the stock has returned a staggering 100% to shareholders over the last five years, it looks like investors are recognizing these changes. Therefore, we think it would be worth your time to check if these trends are going to continue.

One more thing to note, we've identified 3 warning signs with Mitsubishi Logisnext and understanding them should be part of your investment process.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.