CVC Brasil Operadora e Agência de Viagens (BVMF:CVCB3) Is Looking To Continue Growing Its Returns On Capital

If you're looking for a multi-bagger, there's a few things to keep an eye out for. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. Speaking of which, we noticed some great changes in CVC Brasil Operadora e Agência de Viagens' (BVMF:CVCB3) returns on capital, so let's have a look.

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

Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for CVC Brasil Operadora e Agência de Viagens, this is the formula:

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

0.11 = R$134m ÷ (R$3.8b - R$2.6b) (Based on the trailing twelve months to June 2025).

Therefore, CVC Brasil Operadora e Agência de Viagens has an ROCE of 11%. On its own, that's a standard return, however it's much better than the 9.0% generated by the Hospitality industry.

See our latest analysis for CVC Brasil Operadora e Agência de Viagens

In the above chart we have measured CVC Brasil Operadora e Agência de Viagens' prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for CVC Brasil Operadora e Agência de Viagens .

What Can We Tell From CVC Brasil Operadora e Agência de Viagens' ROCE Trend?

The fact that CVC Brasil Operadora e Agência de Viagens is now generating some pre-tax profits from its prior investments is very encouraging. About five years ago the company was generating losses but things have turned around because it's now earning 11% on its capital. And unsurprisingly, like most companies trying to break into the black, CVC Brasil Operadora e Agência de Viagens is utilizing 466% more capital than it was five years ago. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

One more thing to note, CVC Brasil Operadora e Agência de Viagens has decreased current liabilities to 68% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. This tells us that CVC Brasil Operadora e Agência de Viagens has grown its returns without a reliance on increasing their current liabilities, which we're very happy with. Nevertheless, there are some potential risks the company is bearing with current liabilities that high, so just keep that in mind.

In Conclusion...

Long story short, we're delighted to see that CVC Brasil Operadora e Agência de Viagens' reinvestment activities have paid off and the company is now profitable. And since the stock has dived 84% over the last five years, there may be other factors affecting the company's prospects. In any case, we believe the economic trends of this company are positive and looking into the stock further could prove rewarding.

While CVC Brasil Operadora e Agência de Viagens looks impressive, no company is worth an infinite price. The intrinsic value infographic for CVCB3 helps visualize whether it is currently trading for a fair price.

While CVC Brasil Operadora e Agência de Viagens 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.