We're Watching These Trends At WONIK MaterialsLtd (KOSDAQ:104830)

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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, the ROCE of WONIK MaterialsLtd (KOSDAQ:104830) looks decent, right now, so lets see what the trend of returns can tell us.

Understanding 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 WONIK MaterialsLtd is:

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

0.13 = ₩44b ÷ (₩393b - ₩61b) (Based on the trailing twelve months to September 2020).

So, WONIK MaterialsLtd has an ROCE of 13%. In absolute terms, that's a satisfactory return, but compared to the Chemicals industry average of 8.0% it's much better.

Check out our latest analysis for WONIK MaterialsLtd

Above you can see how the current ROCE for WONIK MaterialsLtd compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free report on analyst forecasts for the company.

So How Is WONIK MaterialsLtd's ROCE Trending?

The trend of ROCE doesn't stand out much, but returns on a whole are decent. The company has consistently earned 13% for the last five years, and the capital employed within the business has risen 58% in that time. 13% is a pretty standard return, and it provides some comfort knowing that WONIK MaterialsLtd has consistently earned this amount. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.

Our Take On WONIK MaterialsLtd's ROCE

To sum it up, WONIK MaterialsLtd has simply been reinvesting capital steadily, at those decent rates of return. In light of this, the stock has only gained 5.7% over the last five years for shareholders who have owned the stock in this period. That's why it could be worth your time looking into this stock further to discover if it has more traits of a multi-bagger.

Like most companies, WONIK MaterialsLtd does come with some risks, and we've found 1 warning sign that you should be aware of.

While WONIK MaterialsLtd 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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