Returns Are Gaining Momentum At JMTLtd (KOSDAQ:094970)

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. So when we looked at JMTLtd (KOSDAQ:094970) and its trend of ROCE, we really liked what we saw.

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What Is 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. The formula for this calculation on JMTLtd is:

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

0.016 = ₩2.7b ÷ (₩234b - ₩60b) (Based on the trailing twelve months to June 2025).

Therefore, JMTLtd has an ROCE of 1.6%. Ultimately, that's a low return and it under-performs the Electronic industry average of 6.4%.

View our latest analysis for JMTLtd

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

What Can We Tell From JMTLtd's ROCE Trend?

JMTLtd has recently broken into profitability so their prior investments seem to be paying off. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 1.6% on its capital. Not only that, but the company is utilizing 199% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.

The Key Takeaway

Long story short, we're delighted to see that JMTLtd's reinvestment activities have paid off and the company is now profitable. Investors may not be impressed by the favorable underlying trends yet because over the last five years the stock has only returned 31% to shareholders. So exploring more about this stock could uncover a good opportunity, if the valuation and other metrics stack up.

JMTLtd does have some risks though, and we've spotted 2 warning signs for JMTLtd that you might be interested in.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.