Should We Be Excited About The Trends Of Returns At Maniker F & G (KOSDAQ:195500)?

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. In light of that, when we looked at Maniker F & G (KOSDAQ:195500) and its ROCE trend, we weren't exactly thrilled.

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. The formula for this calculation on Maniker F & G is:

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

0.069 = ₩4.1b ÷ (₩88b - ₩27b) (Based on the trailing twelve months to September 2020).

Therefore, Maniker F & G has an ROCE of 6.9%. Even though it's in line with the industry average of 6.9%, it's still a low return by itself.

Check out our latest analysis for Maniker F & G

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're interested in investigating Maniker F & G's past further, check out this free graph of past earnings, revenue and cash flow.

What Does the ROCE Trend For Maniker F & G Tell Us?

When we looked at the ROCE trend at Maniker F & G, we didn't gain much confidence. To be more specific, ROCE has fallen from 11% over the last one year. Meanwhile, the business is utilizing more capital but this hasn't moved the needle much in terms of sales in the past 12 months, so this could reflect longer term investments. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.

The Bottom Line On Maniker F & G's ROCE

In summary, Maniker F & G is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. Since the stock has gained an impressive 12% over the last year, investors must think there's better things to come. Ultimately, if the underlying trends persist, we wouldn't hold our breath on it being a multi-bagger going forward.

One more thing, we've spotted 4 warning signs facing Maniker F & G that you might find interesting.

While Maniker F & G isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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