Returns On Capital Are Showing Encouraging Signs At Gamecard-Joyco HoldingsInc (TSE:6249)

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. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. So on that note, Gamecard-Joyco HoldingsInc (TSE:6249) looks quite promising in regards to its trends of return on capital.

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

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the 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)

0.18 = JP¥11b ÷ (JP¥66b - JP¥8.6b) (Based on the trailing twelve months to March 2024).

Thus, Gamecard-Joyco HoldingsInc has an ROCE of 18%. In absolute terms, that's a satisfactory return, but compared to the Hospitality industry average of 9.6% it's much better.

Check out our latest analysis for Gamecard-Joyco HoldingsInc

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 Gamecard-Joyco HoldingsInc's past further, check out this free graph covering Gamecard-Joyco HoldingsInc's past earnings, revenue and cash flow.

What Can We Tell From Gamecard-Joyco HoldingsInc's ROCE Trend?

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 18%. The amount of capital employed has increased too, by 30%. So we're very much inspired by what we're seeing at Gamecard-Joyco HoldingsInc thanks to its ability to profitably reinvest capital.

In Conclusion...

All in all, it's terrific to see that Gamecard-Joyco HoldingsInc is reaping the rewards from prior investments and is growing its capital base. And with a respectable 75% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

On a separate note, we've found 3 warning signs for Gamecard-Joyco HoldingsInc you'll probably want to know about.

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.

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