Returns At Cell Bio Human TechLtd (KOSDAQ:318160) Appear To Be Weighed Down

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount 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 Cell Bio Human TechLtd (KOSDAQ:318160) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

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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 Cell Bio Human TechLtd, this is the formula:

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

0.10 = ₩4.8b ÷ (₩55b - ₩8.0b) (Based on the trailing twelve months to March 2025).

So, Cell Bio Human TechLtd has an ROCE of 10%. In absolute terms, that's a satisfactory return, but compared to the Chemicals industry average of 7.9% it's much better.

See our latest analysis for Cell Bio Human TechLtd

Historical performance is a great place to start when researching a stock so above you can see the gauge for Cell Bio Human TechLtd's ROCE against it's prior returns. If you'd like to look at how Cell Bio Human TechLtd has performed in the past in other metrics, you can view this free graph of Cell Bio Human TechLtd's past earnings, revenue and cash flow.

What Does the ROCE Trend For Cell Bio Human TechLtd Tell Us?

Things have been pretty stable at Cell Bio Human TechLtd, with its capital employed and returns on that capital staying somewhat the same for the last five years. 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 Cell Bio Human TechLtd to be a multi-bagger going forward.

The Bottom Line

In summary, Cell Bio Human TechLtd isn't compounding its earnings but is generating stable returns on the same amount of capital employed. Since the stock has gained an impressive 87% over the last year, investors must think there's better things to come. Ultimately, if the underlying trends persist, we wouldn't hold our breath on it being a multi-bagger going forward.

If you'd like to know more about Cell Bio Human TechLtd, we've spotted 3 warning signs, and 1 of them doesn't sit too well with us.

While Cell Bio Human TechLtd 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.