I'm LongbridgeAI, I can summarize articles.James Fisher and Sons (LON:FSJ) has shown stagnant returns on capital employed (ROCE) at 7.1%, below the industry average of 9.1%. Over the past five years, the capital employed has decreased by 36%, indicating a shrinking business. The stock has fallen 57% during this period, leading to concerns about its potential as a multi-bagger investment. Investors are advised to be cautious, as there are three warning signs associated with the company, two of which are concerning.
To find a multi-bagger stock, what are the underlying trends we should look for in a business? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing 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 investigating James Fisher and Sons (LON:FSJ), we don't think it's current trends fit the mold of a multi-bagger.
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What Is Return On Capital Employed (ROCE)?
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 James Fisher and Sons is:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.071 = UK£24m ÷ (UK£510m - UK£170m) (Based on the trailing twelve months to June 2025).
So, James Fisher and Sons has an ROCE of 7.1%. In absolute terms, that's a low return and it also under-performs the Infrastructure industry average of 9.1%.
See our latest analysis for James Fisher and Sons
In the above chart we have measured James Fisher and Sons' 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 James Fisher and Sons .
What Can We Tell From James Fisher and Sons' ROCE Trend?
We've noticed that although returns on capital are flat over the last five years, the amount of capital employed in the business has fallen 36% in that same period. This indicates to us that assets are being sold and thus the business is likely shrinking, which you'll remember isn't the typical ingredients for an up-and-coming multi-bagger. In addition to that, since the ROCE doesn't scream "quality" at 7.1%, it's hard to get excited about these developments.
The Bottom Line
Overall, we're not ecstatic to see James Fisher and Sons reducing the amount of capital it employs in the business. And investors appear hesitant that the trends will pick up because the stock has fallen 57% in the last five years. On the whole, we aren't too inspired by the underlying trends and we think there may be better chances of finding a multi-bagger elsewhere.
Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for James Fisher and Sons (of which 2 are concerning!) that you should know about.
While James Fisher and Sons may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.