KOLMAR BNHLtd (KOSDAQ:200130) Will Be Hoping To Turn Its Returns On Capital Around

If you're looking for a multi-bagger, there's a few things to 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. In light of that, when we looked at KOLMAR BNHLtd (KOSDAQ:200130) and its ROCE trend, we weren't exactly thrilled.

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. To calculate this metric for KOLMAR BNHLtd, this is the formula:

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

0.062 = ₩30b ÷ (₩709b - ₩223b) (Based on the trailing twelve months to March 2024).

Therefore, KOLMAR BNHLtd has an ROCE of 6.2%. In absolute terms, that's a low return and it also under-performs the Personal Products industry average of 8.5%.

View our latest analysis for KOLMAR BNHLtd

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 KOLMAR BNHLtd's past further, check out this free graph covering KOLMAR BNHLtd's past earnings, revenue and cash flow.

What Can We Tell From KOLMAR BNHLtd's ROCE Trend?

When we looked at the ROCE trend at KOLMAR BNHLtd, we didn't gain much confidence. To be more specific, ROCE has fallen from 28% over the last five years. 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

To conclude, we've found that KOLMAR BNHLtd is reinvesting in the business, but returns have been falling. Since the stock has declined 26% over the last five years, investors may not be too optimistic on this trend improving either. Therefore based on the analysis done in this article, we don't think KOLMAR BNHLtd has the makings of a multi-bagger.

One final note, you should learn about the 3 warning signs we've spotted with KOLMAR BNHLtd (including 1 which is concerning) .

While KOLMAR BNHLtd 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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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.

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