Returns Are Gaining Momentum At Isetan Mitsukoshi Holdings (TSE:3099)

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Speaking of which, we noticed some great changes in Isetan Mitsukoshi Holdings' (TSE:3099) returns on capital, so let's have a look.

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Return On Capital Employed (ROCE): What Is It?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Isetan Mitsukoshi Holdings, this is the formula:

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

0.091 = JP¥73b ÷ (JP¥1.2t - JP¥375b) (Based on the trailing twelve months to September 2025).

Therefore, Isetan Mitsukoshi Holdings has an ROCE of 9.1%. Even though it's in line with the industry average of 9.1%, it's still a low return by itself.

View our latest analysis for Isetan Mitsukoshi Holdings

Above you can see how the current ROCE for Isetan Mitsukoshi Holdings compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Isetan Mitsukoshi Holdings .

What Does the ROCE Trend For Isetan Mitsukoshi Holdings Tell Us?

Shareholders will be relieved that Isetan Mitsukoshi Holdings has broken into profitability. While the business was unprofitable in the past, it's now turned things around and is earning 9.1% on its capital. Interestingly, the capital employed by the business has remained relatively flat, so these higher returns are either from prior investments paying off or increased efficiencies. 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.

Our Take On Isetan Mitsukoshi Holdings' ROCE

To bring it all together, Isetan Mitsukoshi Holdings has done well to increase the returns it's generating from its capital employed. Since the stock has returned a staggering 307% 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 Isetan Mitsukoshi Holdings can keep these trends up, it could have a bright future ahead.

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While Isetan Mitsukoshi Holdings 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.