For investors seeking the elusive multi-bagger, the hunt involves a keen eye for companies exhibiting increasing Returns on Capital Employed (ROCE) alongside a growing capital base. This confluence signifies a business that consistently reinvests profits at escalating rates of return. One company that stands out in this regard is Fortescue (ASX: FMG), and a closer look at its ROCE reveals a promising trend worth exploring.

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Understanding Return on Capital Employed (ROCE)


ROCE measures the pre-tax profits a company can generate from the capital employed in its business. The formula for calculating ROCE is:

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

As of the trailing twelve months to June 2023, Fortescue's ROCE stands at an impressive 31%. This not only represents a fantastic return but also outpaces the industry average of 9.0%.

Fortescue's ROCE Performance

Current Snapshot: Impressive Returns

Fortescue's robust performance is underscored by its ability to generate a 31% return on the capital employed. This is a testament to the company's efficiency in utilizing its resources to drive profitability. Notably, Fortescue's return significantly surpasses the industry benchmark, reflecting its standout position in the sector.

Historical Performance: A Positive Trajectory

Examining the trend over the last five years, Fortescue has witnessed a substantial increase in returns on capital employed. Starting from an undisclosed baseline, the company has elevated its ROCE to the current noteworthy 31%. Simultaneously, the capital employed has seen a commendable 55% increase. This dual growth indicates that Fortescue is not only making more money per dollar of capital but is also effectively scaling its operations.

The Investment Outlook for Fortescue

Investors seeking multi-bagger opportunities are likely to find Fortescue an intriguing prospect. The company's ability to profitably reinvest capital, as evidenced by the upward trajectory of ROCE, positions it as a compelling player in the market.

Analyst Forecasts: A Glimpse into the Future

While historical performance is insightful, looking ahead is equally crucial for investors. Analyst forecasts provide a glimpse into the anticipated trajectory of a company. For a more comprehensive understanding, investors are encouraged to explore detailed analyst predictions in Fortescue's free report.

Sustaining Positive Trends

Fortescue's ability to consistently increase returns on capital employed is a positive indicator of its financial health and strategic acumen. Investors are well-advised to delve deeper into the company's financial reports and strategic initiatives to assess the sustainability of these promising trends.

In Conclusion

In conclusion, Fortescue's exceptional ROCE and its upward trajectory over the years position it as a noteworthy contender for investors seeking substantial returns. The company's ability to efficiently utilize capital for profitability, coupled with its historical performance, makes it a stock worth researching further. As Fortescue continues to navigate the dynamic market landscape, its proven trends and promising outlook underscore its potential for sustained success.


For investors intrigued by the allure of multi-baggers, Fortescue's ROCE story offers an intriguing narrative. However, prudent decision-making requires a comprehensive exploration of all factors, including potential risks and future growth catalysts. Researching the company's fundamentals and staying attuned to market dynamics will contribute to a well-informed investment strategy.


As Fortescue unfolds its next chapter in the market narrative, investors keen on uncovering multi-bagger opportunities may find this story particularly compelling.