Returns On Capital At Operadora de Sites Mexicanos. de (BMV:SITES1A-1) Have Stalled

If you're looking for a multi-bagger, there's a few things to keep an eye out for. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount 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. Although, when we looked at Operadora de Sites Mexicanos. de (BMV:SITES1A-1), it didn't seem to tick all of these boxes.

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

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 Operadora de Sites Mexicanos. de:

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

0.065 = Mex$5.9b ÷ (Mex$106b - Mex$16b) (Based on the trailing twelve months to March 2025).

Thus, Operadora de Sites Mexicanos. de has an ROCE of 6.5%. In absolute terms, that's a low return but it's around the Telecom industry average of 6.5%.

View our latest analysis for Operadora de Sites Mexicanos. de

In the above chart we have measured Operadora de Sites Mexicanos. de's 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 Operadora de Sites Mexicanos. de .

What Can We Tell From Operadora de Sites Mexicanos. de's ROCE Trend?

There are better returns on capital out there than what we're seeing at Operadora de Sites Mexicanos. de. The company has consistently earned 6.5% for the last five years, and the capital employed within the business has risen 75% 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.

What We Can Learn From Operadora de Sites Mexicanos. de's ROCE

In conclusion, Operadora de Sites Mexicanos. de has been investing more capital into the business, but returns on that capital haven't increased. And in the last three years, the stock has given away 21% so the market doesn't look too hopeful on these trends strengthening any time soon. In any case, the stock doesn't have these traits of a multi-bagger discussed above, so if that's what you're looking for, we think you'd have more luck elsewhere.

Operadora de Sites Mexicanos. de does come with some risks though, we found 2 warning signs in our investment analysis, and 1 of those can't be ignored...

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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.