Explore Experian’s Fair Values from the Community and select yours
If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. 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. If you see this, it typically means it’s a company with a great business model and plenty of profitable reinvestment opportunities. So, when we ran our eye over Experian’s (LON:EXPN) trend of ROCE, we liked what we saw.
For those who don’t know, ROCE is a measure of a company’s yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Experian:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)
0.19 = US$1.9b ÷ (US$13b – US$3.0b) (Based on the trailing twelve months to March 2025).
Therefore, Experian has an ROCE of 19%. In absolute terms, that’s a satisfactory return, but compared to the Professional Services industry average of 13% it’s much better.
See our latest analysis for Experian
In the above chart we have measured Experian’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 Experian .
While the returns on capital are good, they haven’t moved much. The company has employed 48% more capital in the last five years, and the returns on that capital have remained stable at 19%. 19% is a pretty standard return, and it provides some comfort knowing that Experian has consistently earned this amount. Over long periods of time, returns like these might not be too exciting, but with consistency they can pay off in terms of share price returns.
To sum it up, Experian has simply been reinvesting capital steadily, at those decent rates of return. And the stock has followed suit returning a meaningful 47% to shareholders over the last five years. So while the positive underlying trends may be accounted for by investors, we still think this stock is worth looking into further.
One more thing, we’ve spotted 1 warning sign facing Experian that you might find interesting.