Returns On Capital Are Showing Encouraging Signs At Globus Maritime (NASDAQ:GLBS)
Globus Maritime (NASDAQ:GLBS) shows encouraging signs with its Return on Capital Employed (ROCE) now at 0.4%, up from loss-making five years ago. Despite underperforming the shipping industry average of 7.4%, the company has increased its capital utilization by 285%, indicating profitable reinvestment opportunities. Although the stock has dropped 87% over five years, the fundamentals suggest potential for further investigation. However, there are two warning signs to be aware of.
Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. 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. Speaking of which, we noticed some great changes in Globus Maritime's (NASDAQ:GLBS) returns on capital, so let's have a look.
We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
Return On Capital Employed (ROCE): What Is It?
Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Globus Maritime is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.004 = US$1.0m ÷ (US$290m - US$32m) (Based on the trailing twelve months to September 2025).
Thus, Globus Maritime has an ROCE of 0.4%. Ultimately, that's a low return and it under-performs the Shipping industry average of 7.4%.
Check out our latest analysis for Globus Maritime
In the above chart we have measured Globus Maritime's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering Globus Maritime for free.
What The Trend Of ROCE Can Tell Us
We're delighted to see that Globus Maritime is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 0.4% on its capital. And unsurprisingly, like most companies trying to break into the black, Globus Maritime is utilizing 285% more capital than it was five years ago. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a multi-bagger performance.
The Bottom Line On Globus Maritime's ROCE
Long story short, we're delighted to see that Globus Maritime's reinvestment activities have paid off and the company is now profitable. And since the stock has dived 87% over the last five years, there may be other factors affecting the company's prospects. Regardless, we think the underlying fundamentals warrant this stock for further investigation.
On a final note, we've found 2 warning signs for Globus Maritime that we think you should be aware of.
While Globus Maritime isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
