Returns Are Gaining Momentum At Agabang&Company (KOSDAQ:013990)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount 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. Speaking of which, we noticed some great changes in Agabang&Company's (KOSDAQ:013990) returns on capital, so let's have a look.

Our free stock report includes 1 warning sign investors should be aware of before investing in Agabang&Company. Read for free now.

What Is Return On Capital Employed (ROCE)?

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. Analysts use this formula to calculate it for Agabang&Company:

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

0.084 = ₩15b ÷ (₩224b - ₩42b) (Based on the trailing twelve months to December 2024).

Thus, Agabang&Company has an ROCE of 8.4%. On its own that's a low return, but compared to the average of 6.7% generated by the Luxury industry, it's much better.

Check out our latest analysis for Agabang&Company

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you'd like to look at how Agabang&Company has performed in the past in other metrics, you can view this free graph of Agabang&Company's past earnings, revenue and cash flow.

What Does the ROCE Trend For Agabang&Company Tell Us?

Agabang&Company has broken into the black (profitability) and we're sure it's a sight for sore eyes. The company was generating losses five years ago, but has managed to turn it around and as we saw earlier is now earning 8.4%, which is always encouraging. While returns have increased, the amount of capital employed by Agabang&Company has remained flat over the period. With no noticeable increase in capital employed, it's worth knowing what the company plans on doing going forward in regards to reinvesting and growing the business. So if you're looking for high growth, you'll want to see a business's capital employed also increasing.

In Conclusion...

As discussed above, Agabang&Company appears to be getting more proficient at generating returns since capital employed has remained flat but earnings (before interest and tax) are up. Since the stock has returned a staggering 108% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Agabang&Company can keep these trends up, it could have a bright future ahead.

Agabang&Company does have some risks though, and we've spotted 1 warning sign for Agabang&Company that you might be interested in.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high 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.