Investors Could Be Concerned With Unifique Telecomunicações' (BVMF:FIQE3) Returns On Capital

There are a few key trends to look for if we want to identify the next multi-bagger. Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. However, after briefly looking over the numbers, we don't think Unifique Telecomunicações (BVMF:FIQE3) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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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 Unifique Telecomunicações, this is the formula:

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

0.15 = R$284m ÷ (R$2.3b - R$357m) (Based on the trailing twelve months to June 2025).

Thus, Unifique Telecomunicações has an ROCE of 15%. In absolute terms, that's a satisfactory return, but compared to the Telecom industry average of 9.0% it's much better.

Check out our latest analysis for Unifique Telecomunicações

In the above chart we have measured Unifique Telecomunicações' prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Unifique Telecomunicações .

What The Trend Of ROCE Can Tell Us

When we looked at the ROCE trend at Unifique Telecomunicações, we didn't gain much confidence. Over the last five years, returns on capital have decreased to 15% from 31% five years ago. Although, given both revenue and the amount of assets employed in the business have increased, it could suggest the company is investing in growth, and the extra capital has led to a short-term reduction in ROCE. If these investments prove successful, this can bode very well for long term stock performance.

On a side note, Unifique Telecomunicações has done well to pay down its current liabilities to 15% of total assets. That could partly explain why the ROCE has dropped. What's more, this can reduce some aspects of risk to the business because now the company's suppliers or short-term creditors are funding less of its operations. Some would claim this reduces the business' efficiency at generating ROCE since it is now funding more of the operations with its own money.

In Conclusion...

Even though returns on capital have fallen in the short term, we find it promising that revenue and capital employed have both increased for Unifique Telecomunicações. And the stock has followed suit returning a meaningful 63% to shareholders over the last three years. So should these growth trends continue, we'd be optimistic on the stock going forward.

Unifique Telecomunicações does have some risks though, and we've spotted 1 warning sign for Unifique Telecomunicações that you might be interested in.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

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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.