HD-Hyundai Marine Engine (KRX:071970) Is Looking To Continue Growing Its Returns On Capital

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. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Speaking of which, we noticed some great changes in HD-Hyundai Marine Engine's (KRX:071970) returns on capital, so let's have a look.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for HD-Hyundai Marine Engine:

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

0.12 = ₩43b ÷ (₩575b - ₩215b) (Based on the trailing twelve months to June 2025).

Therefore, HD-Hyundai Marine Engine has an ROCE of 12%. In absolute terms, that's a satisfactory return, but compared to the Machinery industry average of 6.5% it's much better.

Check out our latest analysis for HD-Hyundai Marine Engine

Above you can see how the current ROCE for HD-Hyundai Marine Engine 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 HD-Hyundai Marine Engine .

What The Trend Of ROCE Can Tell Us

We're delighted to see that HD-Hyundai Marine Engine is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 12% on its capital. In addition to that, HD-Hyundai Marine Engine is employing 41% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

What We Can Learn From HD-Hyundai Marine Engine's ROCE

Long story short, we're delighted to see that HD-Hyundai Marine Engine's reinvestment activities have paid off and the company is now profitable. And a remarkable 2,065% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if HD-Hyundai Marine Engine can keep these trends up, it could have a bright future ahead.

Like most companies, HD-Hyundai Marine Engine does come with some risks, and we've found 1 warning sign that you should be aware of.

While HD-Hyundai Marine Engine 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.