The Returns At DaikokutenbussanLtd (TSE:2791) Aren't Growing

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. That's why when we briefly looked at DaikokutenbussanLtd's (TSE:2791) ROCE trend, we were pretty happy with what we saw.

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Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for DaikokutenbussanLtd:

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

0.14 = JP¥9.7b ÷ (JP¥116b - JP¥46b) (Based on the trailing twelve months to May 2025).

Thus, DaikokutenbussanLtd has an ROCE of 14%. In absolute terms, that's a satisfactory return, but compared to the Consumer Retailing industry average of 9.2% it's much better.

Check out our latest analysis for DaikokutenbussanLtd

Above you can see how the current ROCE for DaikokutenbussanLtd compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for DaikokutenbussanLtd .

What The Trend Of ROCE Can Tell Us

The trend of ROCE doesn't stand out much, but returns on a whole are decent. The company has consistently earned 14% for the last five years, and the capital employed within the business has risen 59% in that time. 14% is a pretty standard return, and it provides some comfort knowing that DaikokutenbussanLtd has consistently earned this amount. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.

The Bottom Line On DaikokutenbussanLtd's ROCE

In the end, DaikokutenbussanLtd has proven its ability to adequately reinvest capital at good rates of return. However, over the last five years, the stock has only delivered a 35% return to shareholders who held over that period. So to determine if DaikokutenbussanLtd is a multi-bagger going forward, we'd suggest digging deeper into the company's other fundamentals.

DaikokutenbussanLtd could be trading at an attractive price in other respects, so you might find our free intrinsic value estimation for 2791 on our platform quite valuable.

While DaikokutenbussanLtd 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.