Returns On Capital At SNT Motiv (KRX:064960) Have Hit The Brakes

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. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, the ROCE of SNT Motiv (KRX:064960) looks decent, right now, so lets see what the trend of returns can tell us.

Understanding Return On Capital Employed (ROCE)

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for SNT Motiv:

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

0.10 = ₩101b ÷ (₩1.2t - ₩212b) (Based on the trailing twelve months to September 2024).

So, SNT Motiv has an ROCE of 10%. On its own, that's a standard return, however it's much better than the 8.2% generated by the Auto Components industry.

View our latest analysis for SNT Motiv

In the above chart we have measured SNT Motiv's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering SNT Motiv for free.

How Are Returns Trending?

While the returns on capital are good, they haven't moved much. The company has consistently earned 10% for the last five years, and the capital employed within the business has risen 27% in that time. 10% is a pretty standard return, and it provides some comfort knowing that SNT Motiv has consistently earned this amount. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.

The Bottom Line

To sum it up, SNT Motiv has simply been reinvesting capital steadily, at those decent rates of return. However, over the last five years, the stock has only delivered a 39% return to shareholders who held over that period. So to determine if SNT Motiv is a multi-bagger going forward, we'd suggest digging deeper into the company's other fundamentals.

On a final note, we've found 1 warning sign for SNT Motiv that we think you should be aware of.

While SNT Motiv 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.