Tootsie Roll Industries (NYSE:TR) Is Experiencing Growth In Returns On Capital

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. 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 Tootsie Roll Industries' (NYSE:TR) returns on capital, so let's have a look.

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Understanding 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. To calculate this metric for Tootsie Roll Industries, this is the formula:

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

0.11 = US$123m ÷ (US$1.2b - US$107m) (Based on the trailing twelve months to September 2025).

Thus, Tootsie Roll Industries has an ROCE of 11%. On its own, that's a standard return, however it's much better than the 8.6% generated by the Food industry.

See our latest analysis for Tootsie Roll Industries NYSE:TR Return on Capital Employed January 8th 2026

Historical performance is a great place to start when researching a stock so above you can see the gauge for Tootsie Roll Industries' ROCE against it's prior returns. If you want to delve into the historical earnings , check out these freegraphs detailing revenue and cash flow performance of Tootsie Roll Industries.

The Trend Of ROCE

The trends we've noticed at Tootsie Roll Industries are quite reassuring. Over the last five years, returns on capital employed have risen substantially to 11%. Basically the business is earning more per dollar of capital invested and in addition to that, 24% more capital is being employed now too. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.

Our Take On Tootsie Roll Industries' ROCE

All in all, it's terrific to see that Tootsie Roll Industries is reaping the rewards from prior investments and is growing its capital base. Since the stock has returned a solid 46% to shareholders over the last five years, it's fair to say investors are beginning to recognize these changes. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

Story Continues

On the other side of ROCE, we have to consider valuation. That's why we have a FREE intrinsic value estimation for TR on our platform that is definitely worth checking out.

If you want to search for solid companies with great earnings, check out this freelist 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.

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