Satrec Initiative (KOSDAQ:099320) Will Want To Turn Around Its Return Trends

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Having said that, from a first glance at Satrec Initiative (KOSDAQ:099320) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

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What Is Return On Capital Employed (ROCE)?

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 Satrec Initiative, this is the formula:

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

0.029 = ₩7.1b ÷ (₩372b - ₩122b) (Based on the trailing twelve months to September 2025).

So, Satrec Initiative has an ROCE of 2.9%. Ultimately, that's a low return and it under-performs the Aerospace & Defense industry average of 7.2%.

See our latest analysis for Satrec Initiative

Above you can see how the current ROCE for Satrec Initiative compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Satrec Initiative .

So How Is Satrec Initiative's ROCE Trending?

When we looked at the ROCE trend at Satrec Initiative, we didn't gain much confidence. Around five years ago the returns on capital were 14%, but since then they've fallen to 2.9%. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.

Our Take On Satrec Initiative's ROCE

Even though returns on capital have fallen in the short term, we find it promising that revenue and capital employed have both increased for Satrec Initiative. And the stock has followed suit returning a meaningful 95% to shareholders over the last five years. So while investors seem to be recognizing these promising trends, we would look further into this stock to make sure the other metrics justify the positive view.

On a final note, we found 3 warning signs for Satrec Initiative (1 is concerning) you should be aware of.

While Satrec Initiative 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.