Gamecard-Joyco HoldingsInc (TSE:6249) Is Doing The Right Things To Multiply Its Share Price

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So when we looked at Gamecard-Joyco HoldingsInc (TSE:6249) and its trend of ROCE, we really liked what we saw.

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

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 Gamecard-Joyco HoldingsInc:

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

0.19 = JP¥11b ÷ (JP¥63b - JP¥8.7b) (Based on the trailing twelve months to December 2023).

So, Gamecard-Joyco HoldingsInc has an ROCE of 19%. On its own, that's a standard return, however it's much better than the 8.7% generated by the Hospitality industry.

See our latest analysis for Gamecard-Joyco HoldingsInc

Historical performance is a great place to start when researching a stock so above you can see the gauge for Gamecard-Joyco HoldingsInc's ROCE against it's prior returns. If you'd like to look at how Gamecard-Joyco HoldingsInc has performed in the past in other metrics, you can view this free graph of Gamecard-Joyco HoldingsInc's past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

Investors would be pleased with what's happening at Gamecard-Joyco HoldingsInc. Over the last five years, returns on capital employed have risen substantially to 19%. The amount of capital employed has increased too, by 24%. 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 Gamecard-Joyco HoldingsInc'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 Gamecard-Joyco HoldingsInc has. Since the stock has returned a staggering 127% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Gamecard-Joyco HoldingsInc can keep these trends up, it could have a bright future ahead.

If you'd like to know about the risks facing Gamecard-Joyco HoldingsInc, we've discovered 1 warning sign that you should be aware of.

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.