<!-- HTML_TAG_START -->NasdaqGS:JBSS Return on Capital Employed December 24th 2024<!-- HTML_TAG_END -->
If you’re not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. In a perfect world, we’d like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. 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, the ROCE of John B. Sanfilippo & Son (NASDAQ:JBSS) looks decent, right now, so lets see what the trend of returns can tell us.
For those that aren’t sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on John B. Sanfilippo & Son is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.19 = US$73m ÷ (US$519m – US$140m) (Based on the trailing twelve months to September 2024).
So, John B. Sanfilippo & Son has an ROCE of 19%. In absolute terms, that’s a satisfactory return, but compared to the Food industry average of 11% it’s much better.
View our latest analysis for John B. Sanfilippo & Son
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’d like to look at how John B. Sanfilippo & Son has performed in the past in other metrics, you can view this free graph of John B. Sanfilippo & Son’s past earnings, revenue and cash flow.
While the current returns on capital are decent, they haven’t changed much. Over the past five years, ROCE has remained relatively flat at around 19% and the business has deployed 31% more capital into its operations. Since 19% is a moderate ROCE though, it’s good to see a business can continue to reinvest at these decent rates of return. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.
To sum it up, John B. Sanfilippo & Son has simply been reinvesting capital steadily, at those decent rates of return. However, over the last five years, the stock has only delivered a 14% return to shareholders who held over that period. So to determine if John B. Sanfilippo & Son is a multi-bagger going forward, we’d suggest digging deeper into the company’s other fundamentals.
