The Returns On Capital At DAEDUCK ELECTRONICS (KRX:353200) Don't Inspire Confidence

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. In light of that, when we looked at DAEDUCK ELECTRONICS (KRX:353200) and its ROCE trend, we weren't exactly thrilled.

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Return On Capital Employed (ROCE): What Is It?

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for DAEDUCK ELECTRONICS:

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

0.0089 = ₩7.9b ÷ (₩1.1t - ₩214b) (Based on the trailing twelve months to March 2025).

So, DAEDUCK ELECTRONICS has an ROCE of 0.9%. In absolute terms, that's a low return and it also under-performs the Electronic industry average of 6.6%.

See our latest analysis for DAEDUCK ELECTRONICS

In the above chart we have measured DAEDUCK ELECTRONICS' prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for DAEDUCK ELECTRONICS .

What Can We Tell From DAEDUCK ELECTRONICS' ROCE Trend?

In terms of DAEDUCK ELECTRONICS' historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 1.4% over the last four years. Meanwhile, the business is utilizing more capital but this hasn't moved the needle much in terms of sales in the past 12 months, so this could reflect longer term investments. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line.

The Bottom Line

In summary, DAEDUCK ELECTRONICS is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. Although the market must be expecting these trends to improve because the stock has gained 70% over the last five years. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high.

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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.