The Returns On Capital At EcoRodovias Infraestrutura e Logística (BVMF:ECOR3) Don't Inspire Confidence

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. However, after briefly looking over the numbers, we don't think EcoRodovias Infraestrutura e Logística (BVMF:ECOR3) has the makings of a multi-bagger going forward, but let's have a look at why that may be.

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Understanding 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 EcoRodovias Infraestrutura e Logística is:

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

0.12 = R$3.9b ÷ (R$35b - R$3.5b) (Based on the trailing twelve months to September 2025).

Therefore, EcoRodovias Infraestrutura e Logística has an ROCE of 12%. On its own, that's a standard return, however it's much better than the 8.5% generated by the Infrastructure industry.

View our latest analysis for EcoRodovias Infraestrutura e Logística

Above you can see how the current ROCE for EcoRodovias Infraestrutura e Logística 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 EcoRodovias Infraestrutura e Logística .

What The Trend Of ROCE Can Tell Us

On the surface, the trend of ROCE at EcoRodovias Infraestrutura e Logística doesn't inspire confidence. Over the last five years, returns on capital have decreased to 12% from 18% five years ago. However, given capital employed and revenue have both increased it appears that the business is currently pursuing growth, at the consequence of short term returns. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run.

Our Take On EcoRodovias Infraestrutura e Logística's ROCE

Even though returns on capital have fallen in the short term, we find it promising that revenue and capital employed have both increased for EcoRodovias Infraestrutura e Logística. These growth trends haven't led to growth returns though, since the stock has fallen 16% over the last five years. As a result, we'd recommend researching this stock further to uncover what other fundamentals of the business can show us.

If you want to continue researching EcoRodovias Infraestrutura e Logística, you might be interested to know about the 2 warning signs that our analysis has discovered.

If you want to search for solid companies with great earnings, check out this free list of companies with good balance sheets and impressive 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.