Return Trends At AMOREPACIFIC Holdings (KRX:002790) Aren't Appealing

If you're looking for a multi-bagger, there's a few things to keep an eye out for. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. However, after investigating AMOREPACIFIC Holdings (KRX:002790), we don't think it's current trends fit the mold of a multi-bagger.

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Return On Capital Employed (ROCE): What Is It?

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 AMOREPACIFIC Holdings:

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

0.049 = ₩363b ÷ (₩8.5t - ₩1.1t) (Based on the trailing twelve months to June 2025).

Therefore, AMOREPACIFIC Holdings has an ROCE of 4.9%. Ultimately, that's a low return and it under-performs the Personal Products industry average of 7.7%.

Check out our latest analysis for AMOREPACIFIC Holdings

Above you can see how the current ROCE for AMOREPACIFIC Holdings compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering AMOREPACIFIC Holdings for free.

What Does the ROCE Trend For AMOREPACIFIC Holdings Tell Us?

Over the past five years, AMOREPACIFIC Holdings' ROCE and capital employed have both remained mostly flat. Businesses with these traits tend to be mature and steady operations because they're past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect AMOREPACIFIC Holdings to be a multi-bagger going forward.

In Conclusion...

In summary, AMOREPACIFIC Holdings isn't compounding its earnings but is generating stable returns on the same amount of capital employed. And investors appear hesitant that the trends will pick up because the stock has fallen 44% in the last five years. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.

AMOREPACIFIC Holdings does have some risks though, and we've spotted 2 warning signs for AMOREPACIFIC Holdings that you might be interested in.

While AMOREPACIFIC Holdings may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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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.