Returns On Capital At Duskin (TSE:4665) Have Stalled

Simply Wall St · 4d ago

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. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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. Having said that, from a first glance at Duskin (TSE:4665) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

We've discovered 1 warning sign about Duskin. View them for free.

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 Duskin:

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

0.044 = JP¥7.0b ÷ (JP¥198b - JP¥39b) (Based on the trailing twelve months to December 2024).

So, Duskin has an ROCE of 4.4%. In absolute terms, that's a low return and it also under-performs the Commercial Services industry average of 9.9%.

See our latest analysis for Duskin

roce
TSE:4665 Return on Capital Employed April 15th 2025

In the above chart we have measured Duskin's 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 Duskin for free.

So How Is Duskin's ROCE Trending?

Over the past five years, Duskin's ROCE and capital employed have both remained mostly flat. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect Duskin to be a multi-bagger going forward.

What We Can Learn From Duskin's ROCE

We can conclude that in regards to Duskin's returns on capital employed and the trends, there isn't much change to report on. Since the stock has gained an impressive 52% over the last five years, investors must think there's better things to come. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high.

On a separate note, we've found 1 warning sign for Duskin you'll probably want to know about.

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