Ampla Energia e Serviços (BVMF:CBEE3) Has More To Do To Multiply In Value Going Forward

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. In light of that, when we looked at Ampla Energia e Serviços (BVMF:CBEE3) and its ROCE trend, we weren't exactly thrilled.

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What Is Return On Capital Employed (ROCE)?

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. The formula for this calculation on Ampla Energia e Serviços is:

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

0.07 = R$873m ÷ (R$20b - R$7.7b) (Based on the trailing twelve months to September 2025).

Therefore, Ampla Energia e Serviços has an ROCE of 7.0%. In absolute terms, that's a low return and it also under-performs the Electric Utilities industry average of 12%.

See our latest analysis for Ampla Energia e Serviços

Historical performance is a great place to start when researching a stock so above you can see the gauge for Ampla Energia e Serviços' ROCE against it's prior returns. If you're interested in investigating Ampla Energia e Serviços' past further, check out this free graph covering Ampla Energia e Serviços' past earnings, revenue and cash flow.

The Trend Of ROCE

In terms of Ampla Energia e Serviços' historical ROCE trend, it doesn't exactly demand attention. The company has consistently earned 7.0% for the last five years, and the capital employed within the business has risen 51% in that time. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

In Conclusion...

In conclusion, Ampla Energia e Serviços has been investing more capital into the business, but returns on that capital haven't increased. And investors appear hesitant that the trends will pick up because the stock has fallen 39% in the last five years. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.

If you'd like to know more about Ampla Energia e Serviços, we've spotted 5 warning signs, and 1 of them is significant.

While Ampla Energia e Serviços 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.