Seoho ElectricLtd's (KOSDAQ:065710) Returns Have Hit A Wall

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base 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. So, when we ran our eye over Seoho ElectricLtd's (KOSDAQ:065710) trend of ROCE, we liked what we saw.

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

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Seoho ElectricLtd, this is the formula:

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

0.16 = ₩15b ÷ (₩123b - ₩33b) (Based on the trailing twelve months to June 2025).

So, Seoho ElectricLtd has an ROCE of 16%. On its own, that's a standard return, however it's much better than the 9.2% generated by the Electrical industry.

View our latest analysis for Seoho ElectricLtd

Historical performance is a great place to start when researching a stock so above you can see the gauge for Seoho ElectricLtd's ROCE against it's prior returns. If you're interested in investigating Seoho ElectricLtd's past further, check out this free graph covering Seoho ElectricLtd's past earnings, revenue and cash flow.

What Does the ROCE Trend For Seoho ElectricLtd Tell Us?

While the returns on capital are good, they haven't moved much. The company has employed 22% more capital in the last five years, and the returns on that capital have remained stable at 16%. 16% is a pretty standard return, and it provides some comfort knowing that Seoho ElectricLtd 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 On Seoho ElectricLtd's ROCE

In the end, Seoho ElectricLtd has proven its ability to adequately reinvest capital at good rates of return. On top of that, the stock has rewarded shareholders with a remarkable 174% return to those who've held over the last five years. So even though the stock might be more "expensive" than it was before, we think the strong fundamentals warrant this stock for further research.

Like most companies, Seoho ElectricLtd does come with some risks, and we've found 2 warning signs that you should be aware of.

While Seoho ElectricLtd may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.