Investors Will Want Frasers Group's (LON:FRAS) Growth In ROCE To Persist

What are the early trends we should look for to identify a stock that could multiply in value over the long term? 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. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. Speaking of which, we noticed some great changes in Frasers Group's (LON:FRAS) returns on capital, so let's have a look.AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. What Is Return On Capital Employed (ROCE)? If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. To calculate this metric for Frasers Group, this is the formula: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.14 = UK£537m ÷ (UK£5.1b - UK£1.2b) (Based on the trailing twelve months to April 2025). Therefore, Frasers Group has an ROCE of 14%. That's a relatively normal return on capital, and it's around the 13% generated by the Specialty Retail industry. See our latest analysis for Frasers Group LSE:FRAS Return on Capital Employed November 3rd 2025 In the above chart we have measured Frasers Group's prior ROCE against its prior performance, but the future is arguably more important. If you're interested, you can view the analysts predictions in our free analyst report for Frasers Group . The Trend Of ROCE Frasers Group is displaying some positive trends. Over the last five years, returns on capital employed have risen substantially to 14%. The company is effectively making more money per dollar of capital used, and it's worth noting that the amount of capital has increased too, by 29%. So we're very much inspired by what we're seeing at Frasers Group thanks to its ability to profitably reinvest capital. Our Take On Frasers Group's ROCE In summary, it's great to see that Frasers Group can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. Since the stock has returned a solid 67% to shareholders over the last five years, it's fair to say investors are beginning to recognize these changes. In light of that, we think it's worth looking further into this stock because if Frasers Group can keep these trends up, it could have a bright future ahead. If you'd like to know about the risks facing Frasers Group, we've discovered 2 warning signs that you should be aware of. While Frasers Group isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.