FUJITA CORPORATIONLtd (TSE:3370) Shareholders Will Want The ROCE Trajectory To Continue

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount 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. With that in mind, we've noticed some promising trends at FUJITA CORPORATIONLtd (TSE:3370) so let's look a bit deeper.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Understanding 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. To calculate this metric for FUJITA CORPORATIONLtd, this is the formula:

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

0.057 = JP¥114m ÷ (JP¥2.8b - JP¥785m) (Based on the trailing twelve months to March 2025).

Thus, FUJITA CORPORATIONLtd has an ROCE of 5.7%. Ultimately, that's a low return and it under-performs the Hospitality industry average of 10%.

See our latest analysis for FUJITA CORPORATIONLtd

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're interested in investigating FUJITA CORPORATIONLtd's past further, check out this free graph covering FUJITA CORPORATIONLtd's past earnings, revenue and cash flow.

So How Is FUJITA CORPORATIONLtd's ROCE Trending?

FUJITA CORPORATIONLtd has not disappointed with their ROCE growth. More specifically, while the company has kept capital employed relatively flat over the last one year, the ROCE has climbed 27% in that same time. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. It's worth looking deeper into this though because while it's great that the business is more efficient, it might also mean that going forward the areas to invest internally for the organic growth are lacking.

The Bottom Line On FUJITA CORPORATIONLtd's ROCE

In summary, we're delighted to see that FUJITA CORPORATIONLtd has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And since the stock has fallen 37% over the last five years, there might be an opportunity here. With that in mind, we believe the promising trends warrant this stock for further investigation.

One final note, you should learn about the 4 warning signs we've spotted with FUJITA CORPORATIONLtd (including 3 which are concerning) .

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.