The Return Trends At GAMEVIL (KOSDAQ:063080) Look Promising

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. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, 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. With that in mind, we've noticed some promising trends at GAMEVIL (KOSDAQ:063080) so let's look a bit deeper.

Return On Capital Employed (ROCE): What is it?

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on GAMEVIL is:

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

0.073 = ₩23b ÷ (₩433b - ₩112b) (Based on the trailing twelve months to December 2020).

So, GAMEVIL has an ROCE of 7.3%. On its own, that's a low figure but it's around the 8.7% average generated by the Entertainment industry.

Check out our latest analysis for GAMEVIL

Above you can see how the current ROCE for GAMEVIL compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free report for GAMEVIL.

What Does the ROCE Trend For GAMEVIL Tell Us?

GAMEVIL's ROCE growth is quite impressive. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 603% over the last five years. Basically the business is generating higher returns from the same amount of capital and that is proof that there are improvements in the company's efficiencies. The company is doing well in that sense, and it's worth investigating what the management team has planned for long term growth prospects.

Our Take On GAMEVIL's ROCE

To bring it all together, GAMEVIL has done well to increase the returns it's generating from its capital employed. Given the stock has declined 55% in the last five years, this could be a good investment if the valuation and other metrics are also appealing. So researching this company further and determining whether or not these trends will continue seems justified.

If you want to continue researching GAMEVIL, you might be interested to know about the 1 warning sign that our analysis has discovered.

While GAMEVIL 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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