DAEDUCK ELECTRONICS (KRX:353200) Has More To Do To Multiply In Value Going Forward

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? 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. However, after investigating DAEDUCK ELECTRONICS (KRX:353200), we don't think it's current trends fit the mold of a multi-bagger.

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 DAEDUCK ELECTRONICS, this is the formula:

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

0.011 = ₩11b ÷ (₩1.1t - ₩201b) (Based on the trailing twelve months to March 2024).

Thus, DAEDUCK ELECTRONICS has an ROCE of 1.1%. Ultimately, that's a low return and it under-performs the Electronic industry average of 6.9%.

View our latest analysis for DAEDUCK ELECTRONICS

Above you can see how the current ROCE for DAEDUCK ELECTRONICS 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 analyst report for DAEDUCK ELECTRONICS .

So How Is DAEDUCK ELECTRONICS' ROCE Trending?

In terms of DAEDUCK ELECTRONICS' historical ROCE trend, it doesn't exactly demand attention. The company has employed 42% more capital in the last three years, and the returns on that capital have remained stable at 1.1%. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don't provide a high return on capital.

The Bottom Line On DAEDUCK ELECTRONICS' ROCE

Long story short, while DAEDUCK ELECTRONICS has been reinvesting its capital, the returns that it's generating haven't increased. And investors may be recognizing these trends since the stock has only returned a total of 18% to shareholders over the last three years. Therefore, if you're looking for a multi-bagger, we'd propose looking at other options.

On a separate note, we've found 2 warning signs for DAEDUCK ELECTRONICS you'll probably want to know about.

While DAEDUCK ELECTRONICS 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com