Stock Analysis

Should You Invest In Wooree BioLtd (KOSDAQ:082850)?

KOSDAQ:A082850
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Did you know there are some financial metrics that can provide clues of a potential multi-bagger? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. And in light of that, the trends we're seeing at Wooree BioLtd's (KOSDAQ:082850) look very promising so lets take a look.

What is Return On Capital Employed (ROCE)?

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 Wooree BioLtd is:

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

0.22 = ₩42b ÷ (₩722b - ₩534b) (Based on the trailing twelve months to September 2020).

So, Wooree BioLtd has an ROCE of 22%. That's a fantastic return and not only that, it outpaces the average of 9.8% earned by companies in a similar industry.

See our latest analysis for Wooree BioLtd

roce
KOSDAQ:A082850 Return on Capital Employed March 1st 2021

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

What The Trend Of ROCE Can Tell Us

We're pretty happy with how the ROCE has been trending at Wooree BioLtd. We found that the returns on capital employed over the last five years have risen by 91%. The company is now earning ₩0.2 per dollar of capital employed. In regards to capital employed, Wooree BioLtd appears to been achieving more with less, since the business is using 34% less capital to run its operation. Wooree BioLtd may be selling some assets so it's worth investigating if the business has plans for future investments to increase returns further still.

Another thing to note, Wooree BioLtd has a high ratio of current liabilities to total assets of 74%. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

Our Take On Wooree BioLtd's ROCE

In the end, Wooree BioLtd has proven it's capital allocation skills are good with those higher returns from less amount of capital. And a remarkable 102% total return over the last five years tells us that investors are expecting more good things to come in the future. So given the stock has proven it has promising trends, it's worth researching the company further to see if these trends are likely to persist.

One more thing, we've spotted 2 warning signs facing Wooree BioLtd that you might find interesting.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning high returns on equity.

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Valuation is complex, but we're helping make it simple.

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This article by Simply Wall St is general in nature. 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.
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