The Returns At OBIC Business Consultants (TSE:4733) Aren't Growing

There are a few key trends to look for if we want to identify the next multi-bagger. 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. So, when we ran our eye over OBIC Business Consultants' (TSE:4733) trend of ROCE, we liked what we saw.

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 OBIC Business Consultants, this is the formula:

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

0.13 = JP¥20b ÷ (JP¥193b - JP¥37b) (Based on the trailing twelve months to June 2024).

So, OBIC Business Consultants has an ROCE of 13%. That's a relatively normal return on capital, and it's around the 15% generated by the Software industry.

Check out our latest analysis for OBIC Business Consultants

In the above chart we have measured OBIC Business Consultants' prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering OBIC Business Consultants for free.

So How Is OBIC Business Consultants' ROCE Trending?

The trend of ROCE doesn't stand out much, but returns on a whole are decent. The company has employed 28% more capital in the last five years, and the returns on that capital have remained stable at 13%. 13% is a pretty standard return, and it provides some comfort knowing that OBIC Business Consultants has consistently earned this amount. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.

The Bottom Line On OBIC Business Consultants' ROCE

To sum it up, OBIC Business Consultants has simply been reinvesting capital steadily, at those decent rates of return. And the stock has followed suit returning a meaningful 82% to shareholders over the last five years. So while the positive underlying trends may be accounted for by investors, we still think this stock is worth looking into further.

OBIC Business Consultants could be trading at an attractive price in other respects, so you might find our free intrinsic value estimation for 4733 on our platform quite valuable.

While OBIC Business Consultants isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.