Returns Are Gaining Momentum At OceanPact Serviços Marítimos (BVMF:OPCT3)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, 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. With that in mind, we've noticed some promising trends at OceanPact Serviços Marítimos (BVMF:OPCT3) so let's look a bit deeper.

What is 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 OceanPact Serviços Marítimos:

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

0.014 = R$30m ÷ (R$2.5b - R$375m) (Based on the trailing twelve months to December 2021).

So, OceanPact Serviços Marítimos has an ROCE of 1.4%. In absolute terms, that's a low return and it also under-performs the Commercial Services industry average of 10%.

See 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.

So How Is OceanPact Serviços Marítimos' ROCE Trending?

OceanPact Serviços Marítimos has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it's earning 1.4% which is a sight for sore eyes. In addition to that, OceanPact Serviços Marítimos is employing 506% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

What We Can Learn From OceanPact Serviços Marítimos' ROCE

Overall, OceanPact Serviços Marítimos gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. However the stock is down a substantial 73% in the last year so there could be other areas of the business hurting its prospects. Still, it's worth doing some further research to see if the trends will continue into the future.

Like most companies, OceanPact Serviços Marítimos does come with some risks, and we've found 2 warning signs that you should be aware of.

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

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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.