Does COWELL FASHIONLtd (KOSDAQ:033290) Have The DNA Of A Multi-Bagger?

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. 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 looked at the ROCE trend of COWELL FASHIONLtd (KOSDAQ:033290) we really liked what we saw.

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. To calculate this metric for COWELL FASHIONLtd, this is the formula:

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

0.27 = ₩79b ÷ (₩374b - ₩76b) (Based on the trailing twelve months to September 2020).

Therefore, COWELL FASHIONLtd has an ROCE of 27%. In absolute terms that's a great return and it's even better than the Luxury industry average of 7.4%.

View our latest analysis for COWELL FASHIONLtd

Above you can see how the current ROCE for COWELL FASHIONLtd compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.

So How Is COWELL FASHIONLtd's ROCE Trending?

The trends we've noticed at COWELL FASHIONLtd are quite reassuring. Over the last five years, returns on capital employed have risen substantially to 27%. The amount of capital employed has increased too, by 118%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

The Key Takeaway

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what COWELL FASHIONLtd has. Since the stock has returned a staggering 119% 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 COWELL FASHIONLtd can keep these trends up, it could have a bright future ahead.

If you'd like to know more about COWELL FASHIONLtd, we've spotted 2 warning signs, and 1 of them is a bit unpleasant.

If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.

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