Returns At NIPPON PARKING DEVELOPMENTLtd (TSE:2353) Are On The Way Up

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Speaking of which, we noticed some great changes in NIPPON PARKING DEVELOPMENTLtd's (TSE:2353) returns on capital, so let's have a look.

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What Is Return On Capital Employed (ROCE)?

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. The formula for this calculation on NIPPON PARKING DEVELOPMENTLtd is:

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

0.19 = JP¥7.7b ÷ (JP¥50b - JP¥9.2b) (Based on the trailing twelve months to July 2025).

Therefore, NIPPON PARKING DEVELOPMENTLtd has an ROCE of 19%. In absolute terms, that's a satisfactory return, but compared to the Commercial Services industry average of 9.5% it's much better.

Check out our latest analysis for NIPPON PARKING DEVELOPMENTLtd

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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of NIPPON PARKING DEVELOPMENTLtd.

What The Trend Of ROCE Can Tell Us

NIPPON PARKING DEVELOPMENTLtd is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 19%. The amount of capital employed has increased too, by 64%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

Our Take On NIPPON PARKING DEVELOPMENTLtd's ROCE

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what NIPPON PARKING DEVELOPMENTLtd has. And a remarkable 140% 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 NIPPON PARKING DEVELOPMENTLtd can keep these trends up, it could have a bright future ahead.

While NIPPON PARKING DEVELOPMENTLtd looks impressive, no company is worth an infinite price. The intrinsic value infographic for 2353 helps visualize whether it is currently trading for a fair price.

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.