New Delhi, Sept. 28 -- Investors could increasingly look beyond earnings growth to return on capital employed (ROCE) while valuing electronics manufacturing services (EMS) companies, as firms with similar earnings growth but higher ROCE could command premium valuations according to a report by JP Morgan.

Strong revenue growth has driven a re-rating in price-to-earnings (P/E) multiples across the electronics manufacturing services (EMS) sector in recent years. However, the report noted that "one cannot ignore the ROCE of the business, given its capex-intensive and high-NWC (net working capital) nature and, hence, it has to be baked into the multiples as well."

JP Morgan argues in its report, companies with similar earnings growth and hig...