Korea Electric Power Industrial Development (KRX:130660) Could Become A Multi-Bagger

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at the ROCE trend of Korea Electric Power Industrial Development (KRX:130660) we really liked what we saw.

What Is 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 Korea Electric Power Industrial Development:

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

0.21 = ₩30b ÷ (₩204b - ₩64b) (Based on the trailing twelve months to March 2024).

So, Korea Electric Power Industrial Development has an ROCE of 21%. In absolute terms that's a great return and it's even better than the Electric Utilities industry average of 7.4%.

See our latest analysis for Korea Electric Power Industrial Development

Historical performance is a great place to start when researching a stock so above you can see the gauge for Korea Electric Power Industrial Development's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Korea Electric Power Industrial Development.

The Trend Of ROCE

Korea Electric Power Industrial Development is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 21%. The amount of capital employed has increased too, by 21%. So we're very much inspired by what we're seeing at Korea Electric Power Industrial Development thanks to its ability to profitably reinvest capital.

What We Can Learn From Korea Electric Power Industrial Development's ROCE

All in all, it's terrific to see that Korea Electric Power Industrial Development is reaping the rewards from prior investments and is growing its capital base. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue.

On a final note, we found 3 warning signs for Korea Electric Power Industrial Development (2 are significant) you should be aware of.

If you want to search for more stocks that have been earning high returns, check out this free list of stocks with solid balance sheets that are also earning 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.