We Like These Underlying Return On Capital Trends At Vasta Platform (NASDAQ:VSTA)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? In a perfect world, we'd like to see a company investing more capital into its business and ideally the returns earned from that capital are also increasing. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. With that in mind, we've noticed some promising trends at Vasta Platform (NASDAQ:VSTA) so let's look a bit deeper.

We've discovered 3 warning signs about Vasta Platform. View them for free.

What Is Return On Capital Employed (ROCE)?

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. The formula for this calculation on Vasta Platform is:

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

0.025 = R$146m ÷ (R$7.2b - R$1.3b) (Based on the trailing twelve months to March 2025).

So, Vasta Platform has an ROCE of 2.5%. In absolute terms, that's a low return and it also under-performs the Consumer Services industry average of 9.7%.

View our latest analysis for Vasta Platform

Above you can see how the current ROCE for Vasta Platform compares to its prior returns on capital, but there's only so much you can tell from the past. If you're interested, you can view the analysts predictions in our free analyst report for Vasta Platform .

The Trend Of ROCE

While the ROCE isn't as high as some other companies out there, it's great to see it's on the up. The figures show that over the last five years, ROCE has grown 44% whilst employing roughly the same amount of capital. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. On that front, things are looking good so it's worth exploring what management has said about growth plans going forward.

Our Take On Vasta Platform's ROCE

In summary, we're delighted to see that Vasta Platform has been able to increase efficiencies and earn higher rates of return on the same amount of capital. And since the stock has fallen 11% over the last three years, there might be an opportunity here. So researching this company further and determining whether or not these trends will continue seems justified.

Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for Vasta Platform (of which 1 is a bit unpleasant!) that you should know about.

While Vasta Platform 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.