Stock Analysis

What We Make Of MobileleaderLtd's (KOSDAQ:100030) Returns On Capital

KOSDAQ:A100030
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Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, we've noticed some promising trends at MobileleaderLtd (KOSDAQ:100030) so let's look a bit deeper.

Understanding 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. Analysts use this formula to calculate it for MobileleaderLtd:

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

0.08 = ₩3.9b ÷ (₩53b - ₩3.6b) (Based on the trailing twelve months to September 2020).

So, MobileleaderLtd has an ROCE of 8.0%. On its own that's a low return on capital but it's in line with the industry's average returns of 8.4%.

View our latest analysis for MobileleaderLtd

roce
KOSDAQ:A100030 Return on Capital Employed January 6th 2021

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings, revenue and cash flow of MobileleaderLtd, check out these free graphs here.

What Can We Tell From MobileleaderLtd's ROCE Trend?

We're delighted to see that MobileleaderLtd is reaping rewards from its investments and is now generating some pre-tax profits. The company was generating losses five years ago, but now it's earning 8.0% which is a sight for sore eyes. In addition to that, MobileleaderLtd is employing 61% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

The Bottom Line On MobileleaderLtd's ROCE

To the delight of most shareholders, MobileleaderLtd has now broken into profitability. Since the stock has returned a solid 41% to shareholders over the last five years, it's fair to say investors are beginning to recognize these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

On a final note, we found 2 warning signs for MobileleaderLtd (1 shouldn't be ignored) you should be aware of.

While MobileleaderLtd 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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