John Wiley & Sons (NYSE:WLY) Is Doing The Right Things To Multiply Its Share Price

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. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So on that note, John Wiley & Sons (NYSE:WLY) looks quite promising in regards to its trends of return on capital.

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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 John Wiley & Sons:

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

0.13 = US$236m ÷ (US$2.6b - US$717m) (Based on the trailing twelve months to January 2025).

Therefore, John Wiley & Sons has an ROCE of 13%. On its own, that's a standard return, however it's much better than the 8.6% generated by the Media industry.

View our latest analysis for John Wiley & Sons

In the above chart we have measured John Wiley & Sons' 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 John Wiley & Sons for free.

What Can We Tell From John Wiley & Sons' ROCE Trend?

We're pretty happy with how the ROCE has been trending at John Wiley & Sons. We found that the returns on capital employed over the last five years have risen by 37%. That's not bad because this tells for every dollar invested (capital employed), the company is increasing the amount earned from that dollar. In regards to capital employed, John Wiley & Sons appears to been achieving more with less, since the business is using 25% less capital to run its operation. John Wiley & Sons may be selling some assets so it's worth investigating if the business has plans for future investments to increase returns further still.

The Bottom Line On John Wiley & Sons' ROCE

From what we've seen above, John Wiley & Sons has managed to increase it's returns on capital all the while reducing it's capital base. Since the stock has only returned 9.9% to shareholders over the last five years, the promising fundamentals may not be recognized yet by investors. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

On a separate note, we've found 3 warning signs for John Wiley & Sons you'll probably want to know about.

While John Wiley & Sons 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.