Investors Met With Slowing Returns on Capital At Log-In Logística Intermodal (BVMF:LOGN3)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. With that in mind, the ROCE of Log-In Logística Intermodal (BVMF:LOGN3) looks decent, right now, so lets see what the trend of returns can tell us.

Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Log-In Logística Intermodal is:

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

0.12 = R$341m ÷ (R$3.6b - R$715m) (Based on the trailing twelve months to December 2023).

Thus, Log-In Logística Intermodal has an ROCE of 12%. On its own, that's a standard return, however it's much better than the 7.8% generated by the Shipping industry.

Check out our latest analysis for Log-In Logística Intermodal

Above you can see how the current ROCE for Log-In Logística Intermodal 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 analyst report for Log-In Logística Intermodal .

How Are Returns Trending?

While the returns on capital are good, they haven't moved much. The company has employed 239% more capital in the last five years, and the returns on that capital have remained stable at 12%. 12% is a pretty standard return, and it provides some comfort knowing that Log-In Logística Intermodal has consistently earned this amount. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.

The Key Takeaway

The main thing to remember is that Log-In Logística Intermodal has proven its ability to continually reinvest at respectable rates of return. And the stock has done incredibly well with a 284% return over the last five years, so long term investors are no doubt ecstatic with that result. So even though the stock might be more "expensive" than it was before, we think the strong fundamentals warrant this stock for further research.

On a final note, we found 3 warning signs for Log-In Logística Intermodal (1 can't be ignored) you should be aware of.

While Log-In Logística Intermodal 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.