Stock Analysis

Fujipream (TSE:4237) Could Be At Risk Of Shrinking As A Company

TSE:4237
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What financial metrics can indicate to us that a company is maturing or even in decline? Typically, we'll see the trend of both return on capital employed (ROCE) declining and this usually coincides with a decreasing amount of capital employed. This reveals that the company isn't compounding shareholder wealth because returns are falling and its net asset base is shrinking. In light of that, from a first glance at Fujipream (TSE:4237), we've spotted some signs that it could be struggling, so let's investigate.

We've discovered 4 warning signs about Fujipream. View them for free.
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Understanding 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 Fujipream:

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

0.008 = JP¥91m ÷ (JP¥17b - JP¥5.3b) (Based on the trailing twelve months to December 2024).

Thus, Fujipream has an ROCE of 0.8%. In absolute terms, that's a low return and it also under-performs the Electronic industry average of 9.0%.

Check out our latest analysis for Fujipream

roce
TSE:4237 Return on Capital Employed April 15th 2025

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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Fujipream.

What Can We Tell From Fujipream's ROCE Trend?

In terms of Fujipream's historical ROCE movements, the trend doesn't inspire confidence. To be more specific, the ROCE was 3.4% five years ago, but since then it has dropped noticeably. On top of that, it's worth noting that the amount of capital employed within the business has remained relatively steady. Companies that exhibit these attributes tend to not be shrinking, but they can be mature and facing pressure on their margins from competition. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on Fujipream becoming one if things continue as they have.

The Bottom Line On Fujipream's ROCE

In summary, it's unfortunate that Fujipream is generating lower returns from the same amount of capital. But investors must be expecting an improvement of sorts because over the last five yearsthe stock has delivered a respectable 71% return. In any case, the current underlying trends don't bode well for long term performance so unless they reverse, we'd start looking elsewhere.

On a separate note, we've found 4 warning signs for Fujipream you'll probably want to know about.

While Fujipream 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.

About TSE:4237

Fujipream

Manufactures and sells optical filters for plasma display panels, optical devices, photovoltaic devices, and manufacturing devices in Japan.

Adequate balance sheet slight.

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