Investors Met With Slowing Returns on Capital At Manyo Factory (KOSDAQ:439090)

There are a few key trends to look for if we want to identify the next multi-bagger. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. Having said that, from a first glance at Manyo Factory (KOSDAQ:439090) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for Manyo Factory:

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

0.16 = ₩16b ÷ (₩118b - ₩18b) (Based on the trailing twelve months to March 2024).

Thus, Manyo Factory has an ROCE of 16%. In absolute terms, that's a satisfactory return, but compared to the Personal Products industry average of 8.5% it's much better.

See our latest analysis for Manyo Factory

In the above chart we have measured Manyo Factory's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Manyo Factory .

What The Trend Of ROCE Can Tell Us

There hasn't been much to report for Manyo Factory's returns and its level of capital employed because both metrics have been steady for the past . This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So unless we see a substantial change at Manyo Factory in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger.

The Bottom Line On Manyo Factory's ROCE

In a nutshell, Manyo Factory 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 52% so the market doesn't look too hopeful on these trends strengthening any time soon. Therefore based on the analysis done in this article, we don't think Manyo Factory has the makings of a multi-bagger.

If you want to continue researching Manyo Factory, you might be interested to know about the 3 warning signs that our analysis has discovered.

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.