Investors Shouldn't Overlook Janus International Group's (NYSE:JBI) Impressive Returns On Capital

What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, the ROCE of Janus International Group (NYSE:JBI) looks great, so lets see what the trend can tell us.

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. The formula for this calculation on Janus International Group is:

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

0.20 = US$239m ÷ (US$1.3b - US$144m) (Based on the trailing twelve months to June 2024).

Therefore, Janus International Group has an ROCE of 20%. That's a fantastic return and not only that, it outpaces the average of 16% earned by companies in a similar industry.

Check out our latest analysis for Janus International Group

In the above chart we have measured Janus International Group'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 Janus International Group .

The Trend Of ROCE

We like the trends that we're seeing from Janus International Group. The numbers show that in the last four years, the returns generated on capital employed have grown considerably to 20%. The amount of capital employed has increased too, by 54%. So we're very much inspired by what we're seeing at Janus International Group thanks to its ability to profitably reinvest capital.

The Bottom Line On Janus International Group's ROCE

All in all, it's terrific to see that Janus International Group is reaping the rewards from prior investments and is growing its capital base. And since the stock has fallen 27% over the last three years, there might be an opportunity here. That being the case, research into the company's current valuation metrics and future prospects seems fitting.

One more thing, we've spotted 1 warning sign facing Janus International Group that you might find interesting.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning 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.