Capital Allocation Trends At OceanPact Serviços Marítimos (BVMF:OPCT3) Aren't Ideal

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. Having said that, from a first glance at OceanPact Serviços Marítimos (BVMF:OPCT3) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look.

Return On Capital Employed (ROCE): What Is It?

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. To calculate this metric for OceanPact Serviços Marítimos, this is the formula:

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

0.0036 = R$6.5m ÷ (R$2.3b - R$451m) (Based on the trailing twelve months to June 2022).

Thus, OceanPact Serviços Marítimos has an ROCE of 0.4%. In absolute terms, that's a low return and it also under-performs the Commercial Services industry average of 13%.

Check out our latest analysis for OceanPact Serviços Marítimos

Above you can see how the current ROCE for OceanPact Serviços Marítimos compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free report for OceanPact Serviços Marítimos.

The Trend Of ROCE

When we looked at the ROCE trend at OceanPact Serviços Marítimos, we didn't gain much confidence. To be more specific, ROCE has fallen from 0.6% over the last five years. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.

The Bottom Line On OceanPact Serviços Marítimos' ROCE

While returns have fallen for OceanPact Serviços Marítimos in recent times, we're encouraged to see that sales are growing and that the business is reinvesting in its operations. However, despite the promising trends, the stock has fallen 29% over the last year, so there might be an opportunity here for astute investors. As a result, we'd recommend researching this stock further to uncover what other fundamentals of the business can show us.

If you'd like to know more about OceanPact Serviços Marítimos, we've spotted 2 warning signs, and 1 of them is significant.

While OceanPact Serviços Marítimos 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.