What trends should we look for it we want to identify stocks that can multiply in value over the long term? 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. This shows us that it’s a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at ShaMaran Petroleum (CVE:SNM) and its trend of ROCE, we really liked what we saw.
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 ShaMaran Petroleum is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.083 = US$35m ÷ (US$470m – US$50m) (Based on the trailing twelve months to March 2025).
So, ShaMaran Petroleum has an ROCE of 8.3%. On its own, that’s a low figure but it’s around the 9.7% average generated by the Oil and Gas industry.
See our latest analysis for ShaMaran Petroleum
TSXV:SNM Return on Capital Employed July 10th 2025
Above you can see how the current ROCE for ShaMaran Petroleum 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 ShaMaran Petroleum .
ShaMaran Petroleum has recently broken into profitability so their prior investments seem to be paying off. The company was generating losses five years ago, but now it’s earning 8.3% which is a sight for sore eyes. And unsurprisingly, like most companies trying to break into the black, ShaMaran Petroleum is utilizing 1,127% more capital than it was five years ago. This can indicate that there’s plenty of opportunities to invest capital internally and at ever higher rates, both common traits of a multi-bagger.
One more thing to note, ShaMaran Petroleum has decreased current liabilities to 11% of total assets over this period, which effectively reduces the amount of funding from suppliers or short-term creditors. Therefore we can rest assured that the growth in ROCE is a result of the business’ fundamental improvements, rather than a cooking class featuring this company’s books.
In summary, it’s great to see that ShaMaran Petroleum has managed to break into profitability and is continuing to reinvest in its business. Since the stock has returned a staggering 689% to shareholders over the last five years, it looks like investors are recognizing these changes. In light of that, we think it’s worth looking further into this stock because if ShaMaran Petroleum can keep these trends up, it could have a bright future ahead.
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