Why The 33% Return On Capital At ONE CAREER (TSE:4377) Should Have Your Attention

What trends should we look for it we want to identify stocks that can multiply in value over the long term? 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. And in light of that, the trends we're seeing at ONE CAREER's (TSE:4377) look very promising so lets take a look.

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

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on ONE CAREER is:

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

0.33 = JP¥996m ÷ (JP¥4.2b - JP¥1.1b) (Based on the trailing twelve months to December 2023).

Therefore, ONE CAREER has an ROCE of 33%. In absolute terms that's a great return and it's even better than the Professional Services industry average of 15%.

View our latest analysis for ONE CAREER

In the above chart we have measured ONE CAREER's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for ONE CAREER .

So How Is ONE CAREER's ROCE Trending?

ONE CAREER is displaying some positive trends. The numbers show that in the last four years, the returns generated on capital employed have grown considerably to 33%. Basically the business is earning more per dollar of capital invested and in addition to that, 764% more capital is being employed now too. So we're very much inspired by what we're seeing at ONE CAREER thanks to its ability to profitably reinvest capital.

One more thing to note, ONE CAREER has decreased current liabilities to 27% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. This tells us that ONE CAREER has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.

What We Can Learn From ONE CAREER's ROCE

All in all, it's terrific to see that ONE CAREER is reaping the rewards from prior investments and is growing its capital base. Astute investors may have an opportunity here because the stock has declined 18% in the last year. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

ONE CAREER does have some risks though, and we've spotted 1 warning sign for ONE CAREER that you might be interested in.

ONE CAREER is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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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.