Compass Group (LON:CPG) Is Experiencing Growth In Returns On Capital

Simply Wall St

Wed, February 11, 2026 at 2:21 PM GMT+9 2 min read

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CMPGF

+0.84%

CMPGY

+0.28%

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Firstly, we’ll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Ultimately, this demonstrates that it’s a business that is reinvesting profits at increasing rates of return. With that in mind, we’ve noticed some promising trends at Compass Group (LON:CPG) so let’s look a bit deeper.

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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. To calculate this metric for Compass Group, this is the formula:

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

0.19 = US$3.0b ÷ (US$27b - US$11b) (Based on the trailing twelve months to September 2025).

Thus, **Compass Group has an ROCE of 19%. ** On its own, that’s a standard return, however it’s much better than the 7.4% generated by the Hospitality industry.

View our latest analysis for Compass Group

LSE:CPG Return on Capital Employed February 11th 2026

In the above chart we have measured Compass Group’s prior ROCE against its prior performance, but the future is arguably more important. If you’d like to see what analysts are forecasting going forward, you should check out our free analyst report for Compass Group .

What The Trend Of ROCE Can Tell Us

We like the trends that we’re seeing from Compass Group. Over the last five years, returns on capital employed have risen substantially to 19%. Basically the business is earning more per dollar of capital invested and in addition to that, 22% more capital is being employed now too. This can indicate that there’s plenty of opportunities to invest capital internally and at ever higher rates, a combination that’s common among multi-baggers.

The Key Takeaway

In summary, it’s great to see that Compass 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. And with a respectable 56% awarded to those who held the stock over the last five years, you could argue that these developments are starting to get the attention they deserve. In light of that, we think it’s worth looking further into this stock because if Compass Group can keep these trends up, it could have a bright future ahead.

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One more thing to note, we’ve identified ** 3 warning signs ** with Compass Group and understanding these should be part of your investment process.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity.

Have feedback on this article? Concerned about the content? Get in touch** with us directly.**_ Alternatively, email editorial-team (at) simplywallst.com._

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.

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