If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. 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. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after investigating H.B. Fuller (NYSE:FUL), we don't think it's current trends fit the mold of a multi-bagger.

We've discovered 2 warning signs about H.B. Fuller. View them for free.

Understanding 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 H.B. Fuller is:

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

0.084 = US$364m ÷ (US$5.0b - US$615m) (Based on the trailing twelve months to March 2025).

So, H.B. Fuller has an ROCE of 8.4%. On its own, that's a low figure but it's around the 8.8% average generated by the Chemicals industry.

View our latest analysis for H.B. Fuller

Above you can see how the current ROCE for H.B. Fuller compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering H.B. Fuller for free.

What Can We Tell From H.B. Fuller's ROCE Trend?

The returns on capital haven't changed much for H.B. Fuller in recent years. Over the past five years, ROCE has remained relatively flat at around 8.4% and the business has deployed 25% more capital into its operations. This poor ROCE doesn't inspire confidence right now, and with the increase in capital employed, it's evident that the business isn't deploying the funds into high return investments.

Our Take On H.B. Fuller's ROCE

In summary, H.B. Fuller has simply been reinvesting capital and generating the same low rate of return as before. Although the market must be expecting these trends to improve because the stock has gained 50% over the last five years. However, unless these underlying trends turn more positive, we wouldn't get our hopes up too high.

If you want to know some of the risks facing H.B. Fuller we've found 2 warning signs (1 can't be ignored!) that you should be aware of before investing here.

While H.B. Fuller isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.