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We Like These Underlying Return On Capital Trends At TODA KOGYO (TSE:4100)

Simply Wall St · 3d 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. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's 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. So when we looked at TODA KOGYO (TSE:4100) and its trend of ROCE, we really liked what we saw.

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What Is 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 TODA KOGYO:

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

0.0073 = JP¥218m ÷ (JP¥49b - JP¥19b) (Based on the trailing twelve months to September 2025).

Therefore, TODA KOGYO has an ROCE of 0.7%. In absolute terms, that's a low return and it also under-performs the Chemicals industry average of 7.1%.

See our latest analysis for TODA KOGYO

roce
TSE:4100 Return on Capital Employed January 8th 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 want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of TODA KOGYO.

What Does the ROCE Trend For TODA KOGYO Tell Us?

Shareholders will be relieved that TODA KOGYO has broken into profitability. The company now earns 0.7% on its capital, because five years ago it was incurring losses. On top of that, what's interesting is that the amount of capital being employed has remained steady, so the business hasn't needed to put any additional money to work to generate these higher returns. That being said, while an increase in efficiency is no doubt appealing, it'd be helpful to know if the company does have any investment plans going forward. So if you're looking for high growth, you'll want to see a business's capital employed also increasing.

The Bottom Line On TODA KOGYO's ROCE

To bring it all together, TODA KOGYO has done well to increase the returns it's generating from its capital employed. Astute investors may have an opportunity here because the stock has declined 45% in the last five years. With that in mind, we believe the promising trends warrant this stock for further investigation.

TODA KOGYO does come with some risks though, we found 3 warning signs in our investment analysis, and 1 of those is a bit unpleasant...

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