SK eternix (KRX:475150) Has Some Way To Go To Become A Multi-Bagger

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look 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. 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 SK eternix (KRX:475150), we don't think it's current trends fit the mold of a multi-bagger.

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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. The formula for this calculation on SK eternix is:

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

0.097 = ₩58b ÷ (₩1.2t - ₩640b) (Based on the trailing twelve months to June 2025).

So, SK eternix has an ROCE of 9.7%. On its own that's a low return, but compared to the average of 6.0% generated by the Renewable Energy industry, it's much better.

See our latest analysis for SK eternix

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

So How Is SK eternix's ROCE Trending?

Over the past , SK eternix's ROCE and capital employed have both remained mostly flat. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. So unless we see a substantial change at SK eternix in terms of ROCE and additional investments being made, we wouldn't hold our breath on it being a multi-bagger.

On a side note, SK eternix's current liabilities are still rather high at 52% of total assets. This effectively means that suppliers (or short-term creditors) are funding a large portion of the business, so just be aware that this can introduce some elements of risk. While it's not necessarily a bad thing, it can be beneficial if this ratio is lower.

Our Take On SK eternix's ROCE

In a nutshell, SK eternix has been trudging along with the same returns from the same amount of capital over the last . Although the market must be expecting these trends to improve because the stock has gained 32% over the last year. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high.

One final note, you should learn about the 2 warning signs we've spotted with SK eternix (including 1 which can't be ignored) .

While SK eternix 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.