Investors Shouldn't Overlook BANDAI NAMCO Holdings' (TSE:7832) Impressive Returns On Capital

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. And in light of that, the trends we're seeing at BANDAI NAMCO Holdings' (TSE:7832) look very promising so lets take 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. Analysts use this formula to calculate it for BANDAI NAMCO Holdings:

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

0.22 = JP¥180b ÷ (JP¥1.1t - JP¥279b) (Based on the trailing twelve months to March 2025).

Thus, BANDAI NAMCO Holdings has an ROCE of 22%. In absolute terms that's a great return and it's even better than the Leisure industry average of 15%.

Check out our latest analysis for BANDAI NAMCO Holdings

Above you can see how the current ROCE for BANDAI NAMCO Holdings compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering BANDAI NAMCO Holdings for free.

What Can We Tell From BANDAI NAMCO Holdings' ROCE Trend?

Investors would be pleased with what's happening at BANDAI NAMCO Holdings. The data shows that returns on capital have increased substantially over the last five years to 22%. The amount of capital employed has increased too, by 73%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

What We Can Learn From BANDAI NAMCO Holdings' ROCE

In summary, it's great to see that BANDAI NAMCO Holdings 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. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for 7832 that compares the share price and estimated value.

BANDAI NAMCO Holdings 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.