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Nissan Medical Industries' (TLV:NISA) Returns On Capital Not Reflecting Well On The Business

Simply Wall St · 6d ago

When researching a stock for investment, what can tell us that the company is in decline? A business that's potentially in decline often shows two trends, a return on capital employed (ROCE) that's declining, and a base of capital employed that's also declining. This reveals that the company isn't compounding shareholder wealth because returns are falling and its net asset base is shrinking. And from a first read, things don't look too good at Nissan Medical Industries (TLV:NISA), so let's see why.

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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. To calculate this metric for Nissan Medical Industries, this is the formula:

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

0.016 = ₪6.0m ÷ (₪654m - ₪274m) (Based on the trailing twelve months to September 2025).

Therefore, Nissan Medical Industries has an ROCE of 1.6%. Even though it's in line with the industry average of 1.6%, it's still a low return by itself.

See our latest analysis for Nissan Medical Industries

roce
TASE:NISA Return on Capital Employed January 6th 2026

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 Nissan Medical Industries' past further, check out this free graph covering Nissan Medical Industries' past earnings, revenue and cash flow.

What Can We Tell From Nissan Medical Industries' ROCE Trend?

The trend of ROCE at Nissan Medical Industries is showing some signs of weakness. Unfortunately, returns have declined substantially over the last five years to the 1.6% we see today. In addition to that, Nissan Medical Industries is now employing 28% less capital than it was five years ago. When you see both ROCE and capital employed diminishing, it can often be a sign of a mature and shrinking business that might be in structural decline. Typically businesses that exhibit these characteristics aren't the ones that tend to multiply over the long term, because statistically speaking, they've already gone through the growth phase of their life cycle.

On a side note, Nissan Medical Industries' current liabilities have increased over the last five years to 42% of total assets, effectively distorting the ROCE to some degree. If current liabilities hadn't increased as much as they did, the ROCE could actually be even lower. What this means is that in reality, a rather large portion of the business is being funded by the likes of the company's suppliers or short-term creditors, which can bring some risks of its own.

The Bottom Line On Nissan Medical Industries' ROCE

To see Nissan Medical Industries reducing the capital employed in the business in tandem with diminishing returns, is concerning. Long term shareholders who've owned the stock over the last five years have experienced a 64% depreciation in their investment, so it appears the market might not like these trends either. With underlying trends that aren't great in these areas, we'd consider looking elsewhere.

One more thing: We've identified 6 warning signs with Nissan Medical Industries (at least 3 which shouldn't be ignored) , and understanding these would certainly be useful.

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