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Namura Shipbuilding (TSE:7014) Shareholders Will Want The ROCE Trajectory To Continue

Simply Wall St · 08/30 23:01

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So when we looked at Namura Shipbuilding (TSE:7014) and its trend of ROCE, we really liked what we saw.

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What Is Return On Capital Employed (ROCE)?

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Namura Shipbuilding:

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

0.19 = JP¥27b ÷ (JP¥222b - JP¥85b) (Based on the trailing twelve months to June 2025).

Thus, Namura Shipbuilding has an ROCE of 19%. In absolute terms, that's a satisfactory return, but compared to the Machinery industry average of 8.5% it's much better.

Check out our latest analysis for Namura Shipbuilding

roce
TSE:7014 Return on Capital Employed August 30th 2025

In the above chart we have measured Namura Shipbuilding'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 Namura Shipbuilding for free.

How Are Returns Trending?

We're delighted to see that Namura Shipbuilding is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 19% on its capital. And unsurprisingly, like most companies trying to break into the black, Namura Shipbuilding is utilizing 75% more capital than it was five years ago. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

What We Can Learn From Namura Shipbuilding's ROCE

Long story short, we're delighted to see that Namura Shipbuilding's reinvestment activities have paid off and the company is now profitable. Since the stock has returned a staggering 2,323% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Namura Shipbuilding can keep these trends up, it could have a bright future ahead.

Namura Shipbuilding does have some risks though, and we've spotted 1 warning sign for Namura Shipbuilding that you might be interested in.

While Namura Shipbuilding 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.