The Return Trends At Tokyo Ohka Kogyo (TSE:4186) Look Promising

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. 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. Speaking of which, we noticed some great changes in Tokyo Ohka Kogyo's (TSE:4186) returns on capital, so let's have a look.

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What Is Return On Capital Employed (ROCE)?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Tokyo Ohka Kogyo, this is the formula:

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

0.16 = JP¥39b ÷ (JP¥294b - JP¥51b) (Based on the trailing twelve months to June 2025).

Therefore, Tokyo Ohka Kogyo has an ROCE of 16%. On its own, that's a standard return, however it's much better than the 7.2% generated by the Chemicals industry.

View our latest analysis for Tokyo Ohka Kogyo

In the above chart we have measured Tokyo Ohka Kogyo's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Tokyo Ohka Kogyo .

So How Is Tokyo Ohka Kogyo's ROCE Trending?

Investors would be pleased with what's happening at Tokyo Ohka Kogyo. The data shows that returns on capital have increased substantially over the last five years to 16%. The amount of capital employed has increased too, by 45%. So we're very much inspired by what we're seeing at Tokyo Ohka Kogyo thanks to its ability to profitably reinvest capital.

The Bottom Line On Tokyo Ohka Kogyo'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 Tokyo Ohka Kogyo has. And a remarkable 201% total return over the last five years tells us that investors are expecting more good things to come in the future. Therefore, we think it would be worth your time to check if these trends are going to continue.

Before jumping to any conclusions though, we need to know what value we're getting for the current share price. That's where you can check out our FREE intrinsic value estimation for 4186 that compares the share price and estimated value.

While Tokyo Ohka Kogyo 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.