Global Standard Technology's (KOSDAQ:083450) return on capital is showing signs of strength

If you're looking for a multi-bagger, there are a few things to look out for. Typically, you want to look for growth trends. return Return on Invested Capital (ROCE) and associated expansion base Ratio of invested capital. Essentially this means that the company has profitable endeavors that it can continually reinvest in, which is the hallmark of a compound interest machine. Speaking of which, we've noticed some big changes. Global standard technology Let's take a look at (KOSDAQ:083450)'s return on capital.

What is Return on Invested Capital (ROCE)?

For those unsure of what ROCE is, it measures the amount of pre-tax profit a company is able to generate from the capital employed in its business. Analysts use the following formula to calculate Global Standard Technology's ROCE:

Return on Invested Capital = Earnings Before Interest and Taxes (EBIT) ÷ (Total Assets – Current Liabilities)

0.17 = ₩42b ÷ (₩301b – ₩55b) (Based on the trailing 12 months ending March 2024).

therefore, Global Standard Technology has an ROCE of 17%. That's a satisfactory return in absolute terms, but it's much better than the semiconductor industry average of 5.4%.

View our latest analysis for Global Standard Technology

In the chart above we compare Global Standard Technology's past ROCE with its past performance, although the future is arguably more important. If you're interested, you can check out analyst forecasts on our free Global Standard Technology analyst report.

What can Global Standard Technology's ROCE trends tell us?

Global Standard Technology is showing some positive trends. Data shows that its return on capital has increased significantly by 17% over the past five years. It's also worth noting that the company has effectively increased its earnings per dollar of capital employed, and the amount of capital has also increased by 176%. This indicates that there is ample opportunity to invest capital internally, and at even higher rates, a combination that is common among multi-baggers.

Conclusion

In summary, Global Standard Technology has proven it can reinvest in its business and generate higher returns on invested capital, which is great to see. And the impressive total return of 671% over the past five years suggests investors are expecting even better things to come in the future. That being said, we believe this company's promising fundamentals make it worth doing some further due diligence.

Finally, we Two Warning Signs for Global Standard Technology (1 is a concern) I need to know.

For those who want to invest A solid company, Check this out free A list of companies with strong balance sheets and high return on equity.

Have feedback about this article? Concerns about the content? contact Please contact us directly. Or email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.