The Returns At KEPCO Engineering & Construction Company (KRX:052690) Aren't Growing

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Although, when we looked at KEPCO Engineering & Construction Company (KRX:052690), it didn't seem to tick all of these boxes.

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

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. To calculate this metric for KEPCO Engineering & Construction Company, this is the formula:

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

0.077 = ₩47b ÷ (₩898b - ₩289b) (Based on the trailing twelve months to March 2025).

So, KEPCO Engineering & Construction Company has an ROCE of 7.7%. On its own that's a low return, but compared to the average of 5.5% generated by the Construction industry, it's much better.

Check out our latest analysis for KEPCO Engineering & Construction Company

Above you can see how the current ROCE for KEPCO Engineering & Construction Company 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 KEPCO Engineering & Construction Company .

So How Is KEPCO Engineering & Construction Company's ROCE Trending?

Over the past five years, KEPCO Engineering & Construction Company's ROCE and capital employed have both remained mostly flat. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. So don't be surprised if KEPCO Engineering & Construction Company doesn't end up being a multi-bagger in a few years time. This probably explains why KEPCO Engineering & Construction Company is paying out 59% of its income to shareholders in the form of dividends. Given the business isn't reinvesting in itself, it makes sense to distribute a portion of earnings among shareholders.

In Conclusion...

In a nutshell, KEPCO Engineering & Construction Company has been trudging along with the same returns from the same amount of capital over the last five years. Investors must think there's better things to come because the stock has knocked it out of the park, delivering a 549% gain to shareholders who have held over the last five years. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

One more thing to note, we've identified 3 warning signs with KEPCO Engineering & Construction Company and understanding them should be part of your investment process.

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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.