Meta Biomed's (KOSDAQ:059210) Returns On Capital Are Heading Higher

Simply Wall St · 05/08 22:30

If you're looking for a multi-bagger, there's a few things to keep an eye out for. In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, we've noticed some promising trends at Meta Biomed (KOSDAQ:059210) so let's look a bit deeper.

We've discovered 1 warning sign about Meta Biomed. View them for free.

Understanding Return On Capital Employed (ROCE)

For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Meta Biomed:

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

0.17 = ₩17b ÷ (₩177b - ₩74b) (Based on the trailing twelve months to December 2024).

Thus, Meta Biomed has an ROCE of 17%. On its own, that's a standard return, however it's much better than the 8.3% generated by the Medical Equipment industry.

See our latest analysis for Meta Biomed

roce
KOSDAQ:A059210 Return on Capital Employed May 8th 2025

While the past is not representative of the future, it can be helpful to know how a company has performed historically, which is why we have this chart above. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Meta Biomed.

What The Trend Of ROCE Can Tell Us

Meta Biomed is displaying some positive trends. The numbers show that in the last five years, the returns generated on capital employed have grown considerably to 17%. Basically the business is earning more per dollar of capital invested and in addition to that, 62% more capital is being employed now too. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers.

Another thing to note, Meta Biomed has a high ratio of current liabilities to total assets of 42%. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

The Bottom Line On Meta Biomed's ROCE

To sum it up, Meta Biomed has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. Since the stock has returned a staggering 130% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it's worth looking further into this stock because if Meta Biomed can keep these trends up, it could have a bright future ahead.

One more thing to note, we've identified 1 warning sign with Meta Biomed and understanding it should be part of your investment process.

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