Returns On Capital At KineMaster (KOSDAQ:139670) Paint A Concerning Picture

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount 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. Having said that, from a first glance at KineMaster (KOSDAQ:139670) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

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 KineMaster:

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

0.032 = ₩859m ÷ (₩27b - ₩499m) (Based on the trailing twelve months to September 2025).

Therefore, KineMaster has an ROCE of 3.2%. Ultimately, that's a low return and it under-performs the Software industry average of 6.2%.

See our latest analysis for KineMaster

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

How Are Returns Trending?

In terms of KineMaster's historical ROCE movements, the trend isn't fantastic. To be more specific, ROCE has fallen from 27% over the last five years. However it looks like KineMaster might be reinvesting for long term growth because while capital employed has increased, the company's sales haven't changed much in the last 12 months. It may take some time before the company starts to see any change in earnings from these investments.

In Conclusion...

To conclude, we've found that KineMaster is reinvesting in the business, but returns have been falling. Moreover, since the stock has crumbled 91% over the last five years, it appears investors are expecting the worst. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere.

KineMaster does have some risks, we noticed 3 warning signs (and 1 which can't be ignored) we think you should know about.

While KineMaster isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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

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.