The Returns At Ito En (TSE:2593) Aren't Growing

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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. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Having said that, from a first glance at Ito En (TSE:2593) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

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What Is 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 Ito En:

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

0.097 = JP¥23b ÷ (JP¥345b - JP¥108b) (Based on the trailing twelve months to April 2025).

Therefore, Ito En has an ROCE of 9.7%. On its own that's a low return, but compared to the average of 7.8% generated by the Beverage industry, it's much better.

View our latest analysis for Ito En

Above you can see how the current ROCE for Ito En 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 Ito En .

So How Is Ito En's ROCE Trending?

Things have been pretty stable at Ito En, with its capital employed and returns on that capital staying somewhat the same for the last five years. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. So don't be surprised if Ito En doesn't end up being a multi-bagger in a few years time.

The Bottom Line On Ito En's ROCE

We can conclude that in regards to Ito En's returns on capital employed and the trends, there isn't much change to report on. And in the last five years, the stock has given away 44% so the market doesn't look too hopeful on these trends strengthening any time soon. In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere.

If you're still interested in Ito En it's worth checking out our FREE intrinsic value approximation for 2593 to see if it's trading at an attractive price in other respects.

While Ito En may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.