Here's What To Make Of Samhwa Crown & Closure's (KRX:004450) Decelerating Rates Of Return

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. Although, when we looked at Samhwa Crown & Closure (KRX:004450), it didn't seem to tick all of these boxes.

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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. Analysts use this formula to calculate it for Samhwa Crown & Closure:

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

0.046 = ₩7.7b ÷ (₩204b - ₩36b) (Based on the trailing twelve months to June 2025).

Therefore, Samhwa Crown & Closure has an ROCE of 4.6%. In absolute terms, that's a low return but it's around the Packaging industry average of 4.0%.

Check out our latest analysis for Samhwa Crown & Closure

Historical performance is a great place to start when researching a stock so above you can see the gauge for Samhwa Crown & Closure's ROCE against it's prior returns. If you're interested in investigating Samhwa Crown & Closure's past further, check out this free graph covering Samhwa Crown & Closure's past earnings, revenue and cash flow.

How Are Returns Trending?

Over the past five years, Samhwa Crown & Closure's ROCE has remained relatively flat while the business is using 21% less capital than before. This indicates to us that assets are being sold and thus the business is likely shrinking, which you'll remember isn't the typical ingredients for an up-and-coming multi-bagger. Not only that, but the low returns on this capital mentioned earlier would leave most investors unimpressed.

The Bottom Line

Overall, we're not ecstatic to see Samhwa Crown & Closure reducing the amount of capital it employs in the business. And in the last five years, the stock has given away 10% so the market doesn't look too hopeful on these trends strengthening any time soon. 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.

One more thing, we've spotted 3 warning signs facing Samhwa Crown & Closure that you might find interesting.

While Samhwa Crown & Closure isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.