Nasdaq
华尔街日报Returns On Capital Are Showing Encouraging Signs At SpacemarketInc (TSE:4487)
If you're looking for a multi-bagger, there's a few things to keep an eye out for. 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. So on that note, SpacemarketInc (TSE:4487) looks quite promising in regards to its trends of return on capital.
Understanding 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. The formula for this calculation on SpacemarketInc is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.13 = JP¥219m ÷ (JP¥3.2b - JP¥1.5b) (Based on the trailing twelve months to September 2025).
Therefore, SpacemarketInc has an ROCE of 13%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Consumer Services industry average of 11%.
Check out our latest analysis for SpacemarketInc
Historical performance is a great place to start when researching a stock so above you can see the gauge for SpacemarketInc's ROCE against it's prior returns. If you'd like to look at how SpacemarketInc has performed in the past in other metrics, you can view this free graph of SpacemarketInc's past earnings, revenue and cash flow.
What Does the ROCE Trend For SpacemarketInc Tell Us?
We're delighted to see that SpacemarketInc 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 three years ago but is is now generating 13% on its capital. In addition to that, SpacemarketInc is employing 139% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.
Another thing to note, SpacemarketInc has a high ratio of current liabilities to total assets of 48%. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.
The Key Takeaway
To the delight of most shareholders, SpacemarketInc has now broken into profitability. Given the stock has declined 60% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. That being the case, research into the company's current valuation metrics and future prospects seems fitting.
If you'd like to know about the risks facing SpacemarketInc, we've discovered 1 warning sign that you should be aware of.
If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive returns on equity.
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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.