If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. Although, when we looked at Japan Oil Transportation (TSE:9074), it didn’t seem to tick all of these boxes.
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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. Analysts use this formula to calculate it for Japan Oil Transportation:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.052 = JP¥1.9b ÷ (JP¥44b – JP¥7.1b) (Based on the trailing twelve months to September 2025).
Thus, Japan Oil Transportation has an ROCE of 5.2%. Ultimately, that’s a low return and it under-performs the Oil and Gas industry average of 6.8%.
See our latest analysis for Japan Oil Transportation
TSE:9074 Return on Capital Employed November 26th 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’re interested in investigating Japan Oil Transportation’s past further, check out this free graph covering Japan Oil Transportation’s past earnings, revenue and cash flow.
So How Is Japan Oil Transportation’s ROCE Trending?
The returns on capital haven’t changed much for Japan Oil Transportation in recent years. Over the past five years, ROCE has remained relatively flat at around 5.2% and the business has deployed 40% more capital into its operations. This poor ROCE doesn’t inspire confidence right now, and with the increase in capital employed, it’s evident that the business isn’t deploying the funds into high return investments.
The Bottom Line
As we’ve seen above, Japan Oil Transportation’s returns on capital haven’t increased but it is reinvesting in the business. Although the market must be expecting these trends to improve because the stock has gained 97% over the last five years. However, unless these underlying trends turn more positive, we wouldn’t get our hopes up too high.
One more thing, we’ve spotted 2 warning signs facing Japan Oil Transportation that you might find interesting.
While Japan Oil Transportation 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.
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