Wise birds (KOSDAQ:273060) Might Have The Makings Of A Multi-Bagger

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So when we looked at Wise birds (KOSDAQ:273060) and its trend of ROCE, we really liked what we saw.

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Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Wise birds, this is the formula:

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

0.064 = ₩3.4b ÷ (₩165b - ₩113b) (Based on the trailing twelve months to March 2025).

Thus, Wise birds has an ROCE of 6.4%. On its own that's a low return, but compared to the average of 3.7% generated by the Media industry, it's much better.

See our latest analysis for Wise birds

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

What Can We Tell From Wise birds' ROCE Trend?

Wise birds is showing promise given that its ROCE is trending up and to the right. The figures show that over the last two years, ROCE has grown 82% whilst employing roughly the same amount of capital. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities. Effectively this means that suppliers or short-term creditors are now funding 68% of the business, which is more than it was two years ago. And with current liabilities at those levels, that's pretty high.

The Bottom Line On Wise birds' ROCE

In summary, we're delighted to see that Wise birds has been able to increase efficiencies and earn higher rates of return on the same amount of capital. Astute investors may have an opportunity here because the stock has declined 10% in the last three years. So researching this company further and determining whether or not these trends will continue seems justified.

If you'd like to know more about Wise birds, we've spotted 3 warning signs, and 1 of them is a bit concerning.

While Wise birds 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.