- South Korea
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- Medical Equipment
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- KOSDAQ:A119610
Returns On Capital At Interojo (KOSDAQ:119610) Paint A Concerning Picture
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. However, after briefly looking over the numbers, we don't think Interojo (KOSDAQ:119610) has the makings of a multi-bagger going forward, but let's have a look at why that may be.
Return On Capital Employed (ROCE): What Is It?
For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on Interojo is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.015 = ₩2.5b ÷ (₩235b - ₩66b) (Based on the trailing twelve months to March 2025).
Therefore, Interojo has an ROCE of 1.5%. Ultimately, that's a low return and it under-performs the Medical Equipment industry average of 6.7%.
View our latest analysis for Interojo
Historical performance is a great place to start when researching a stock so above you can see the gauge for Interojo's ROCE against it's prior returns. If you're interested in investigating Interojo's past further, check out this free graph covering Interojo's past earnings, revenue and cash flow.
So How Is Interojo's ROCE Trending?
The trend of ROCE doesn't look fantastic because it's fallen from 19% five years ago, while the business's capital employed increased by 26%. Usually this isn't ideal, but given Interojo conducted a capital raising before their most recent earnings announcement, that would've likely contributed, at least partially, to the increased capital employed figure. The funds raised likely haven't been put to work yet so it's worth watching what happens in the future with Interojo's earnings and if they change as a result from the capital raise. It's also worth noting the company's latest EBIT figure is within 10% of the previous year, so it's fair to assign the ROCE drop largely to the capital raise.
Our Take On Interojo's ROCE
We're a bit apprehensive about Interojo because despite more capital being deployed in the business, returns on that capital and sales have both fallen. Investors haven't taken kindly to these developments, since the stock has declined 15% from where it was five years ago. With underlying trends that aren't great in these areas, we'd consider looking elsewhere.
On a separate note, we've found 1 warning sign for Interojo you'll probably want to know about.
If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.
About KOSDAQ:A119610
Interojo
Manufactures and sells contact lenses in South Korea and internationally.
Good value with adequate balance sheet.
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