We're Watching These Trends At Pharmsville (KOSDAQ:318010)

There are a few key trends to look for if we want to identify the next 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. However, after investigating Pharmsville (KOSDAQ:318010), we don't think it's current trends fit the mold of a multi-bagger.

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. The formula for this calculation on Pharmsville is:

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

0.09 = ₩6.0b ÷ (₩70b - ₩3.5b) (Based on the trailing twelve months to September 2020).

Therefore, Pharmsville has an ROCE of 9.0%. In absolute terms, that's a low return, but it's much better than the Personal Products industry average of 6.8%.

View our latest analysis for Pharmsville

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 want to delve into the historical earnings, revenue and cash flow of Pharmsville, check out these free graphs here.

How Are Returns Trending?

Things have been pretty stable at Pharmsville, with its capital employed and returns on that capital staying somewhat the same for the last . Businesses with these traits tend to be mature and steady operations because they're past the growth phase. So don't be surprised if Pharmsville doesn't end up being a multi-bagger in a few years time.

Our Take On Pharmsville's ROCE

In a nutshell, Pharmsville has been trudging along with the same returns from the same amount of capital over the last . And in the last year, the stock has given away 27% so the market doesn't look too hopeful on these trends strengthening any time soon. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.

On a separate note, we've found 4 warning signs for Pharmsville 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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