Returns On Capital At Pan Ocean (KRX:028670) Have Hit The Brakes

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. However, after briefly looking over the numbers, we don't think Pan Ocean (KRX:028670) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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

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 Pan Ocean is:

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

0.054 = ₩474b ÷ (₩10t - ₩1.4t) (Based on the trailing twelve months to June 2025).

Thus, Pan Ocean has an ROCE of 5.4%. In absolute terms, that's a low return but it's around the Shipping industry average of 6.5%.

Check out our latest analysis for Pan Ocean

In the above chart we have measured Pan Ocean's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Pan Ocean .

So How Is Pan Ocean's ROCE Trending?

There are better returns on capital out there than what we're seeing at Pan Ocean. Over the past five years, ROCE has remained relatively flat at around 5.4% and the business has deployed 115% more capital into its operations. 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.

Our Take On Pan Ocean's ROCE

In conclusion, Pan Ocean has been investing more capital into the business, but returns on that capital haven't increased. And with the stock having returned a mere 31% in the last five years to shareholders, you could argue that they're aware of these lackluster trends. Therefore, if you're looking for a multi-bagger, we'd propose looking at other options.

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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.