The Trend Of High Returns At Fable Media Group (NGM:FABLE) Has Us Very Interested

To find a multi-bagger stock, what are the underlying trends we should look for in a business? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing 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. With that in mind, the ROCE of Fable Media Group (NGM:FABLE) looks great, so lets see what the trend can tell us.

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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. The formula for this calculation on Fable Media Group is:

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

0.47 = kr51m ÷ (kr181m - kr73m) (Based on the trailing twelve months to June 2025).

Therefore, Fable Media Group has an ROCE of 47%. In absolute terms that's a great return and it's even better than the Hospitality industry average of 20%.

View our latest analysis for Fable Media Group

In the above chart we have measured Fable Media 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 Fable Media Group .

The Trend Of ROCE

Fable Media Group has not disappointed in regards to ROCE growth. The figures show that over the last three years, returns on capital have grown by 479%. That's a very favorable trend because this means that the company is earning more per dollar of capital that's being employed. Interestingly, the business may be becoming more efficient because it's applying 42% less capital than it was three years ago. A business that's shrinking its asset base like this isn't usually typical of a soon to be multi-bagger company.

On a side note, we noticed that the improvement in ROCE appears to be partly fueled by an increase in current liabilities. Effectively this means that suppliers or short-term creditors are now funding 40% of the business, which is more than it was three years ago. And with current liabilities at those levels, that's pretty high.

What We Can Learn From Fable Media Group's ROCE

In summary, it's great to see that Fable Media Group has been able to turn things around and earn higher returns on lower amounts of capital. Considering the stock has delivered 22% to its stockholders over the last three years, it may be fair to think that investors aren't fully aware of the promising trends yet. Given that, we'd look further into this stock in case it has more traits that could make it multiply in the long term.

Fable Media Group does have some risks though, and we've spotted 1 warning sign for Fable Media Group that you might be interested in.

If you'd like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.