Returns On Capital Are Showing Encouraging Signs At Eagon HoldingsLtd (KOSDAQ:039020)

If you're looking for a multi-bagger, there's a few things to 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. So on that note, Eagon HoldingsLtd (KOSDAQ:039020) looks quite promising in regards to its trends of return on capital.

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

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. To calculate this metric for Eagon HoldingsLtd, this is the formula:

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

0.031 = ₩16b ÷ (₩756b - ₩241b) (Based on the trailing twelve months to June 2025).

Therefore, Eagon HoldingsLtd has an ROCE of 3.1%. Ultimately, that's a low return and it under-performs the Building industry average of 5.4%.

View our latest analysis for Eagon HoldingsLtd

Historical performance is a great place to start when researching a stock so above you can see the gauge for Eagon HoldingsLtd's ROCE against it's prior returns. If you'd like to look at how Eagon HoldingsLtd has performed in the past in other metrics, you can view this free graph of Eagon HoldingsLtd's past earnings, revenue and cash flow.

What The Trend Of ROCE Can Tell Us

While there are companies with higher returns on capital out there, we still find the trend at Eagon HoldingsLtd promising. The figures show that over the last five years, ROCE has grown 50% whilst employing roughly the same amount of capital. So it's likely that the business is now reaping the full benefits of its past investments, since the capital employed hasn't changed considerably. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

The Bottom Line

In summary, we're delighted to see that Eagon HoldingsLtd has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 72% return over the last five years. 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.

One more thing: We've identified 4 warning signs with Eagon HoldingsLtd (at least 2 which are significant) , and understanding them would certainly be useful.

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