Returns At Oriental Land (TSE:4661) Are On The Way Up

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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, we've noticed some promising trends at Oriental Land (TSE:4661) so let's look a bit deeper.

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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 Oriental Land:

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

0.14 = JP¥177b ÷ (JP¥1.4t - JP¥168b) (Based on the trailing twelve months to September 2025).

Therefore, Oriental Land has an ROCE of 14%. In absolute terms, that's a satisfactory return, but compared to the Hospitality industry average of 10% it's much better.

View our latest analysis for Oriental Land

In the above chart we have measured Oriental Land's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Oriental Land .

How Are Returns Trending?

Investors would be pleased with what's happening at Oriental Land. Over the last five years, returns on capital employed have risen substantially to 14%. The amount of capital employed has increased too, by 28%. So we're very much inspired by what we're seeing at Oriental Land thanks to its ability to profitably reinvest capital.

The Bottom Line On Oriental Land's ROCE

All in all, it's terrific to see that Oriental Land is reaping the rewards from prior investments and is growing its capital base. Given the stock has declined 12% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. So researching this company further and determining whether or not these trends will continue seems justified.

While Oriental Land looks impressive, no company is worth an infinite price. The intrinsic value infographic for 4661 helps visualize whether it is currently trading for a fair price.

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

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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.