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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. Amongst other things, we’ll want to see two things; firstly, a growing return<\/em> on capital employed (ROCE) and secondly, an expansion in the company’s amount<\/em> 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. Speaking of which, we noticed some great changes in Tencent Music Entertainment Group’s<\/strong> (NYSE:TME<\/a>) returns on capital, so let’s have a look.<\/p>\n This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.<\/a><\/p>\n For those that aren’t sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. To calculate this metric for Tencent Music Entertainment Group, this is the formula:<\/p>\n Return on Capital Employed = Earnings Before Interest and Tax (EBIT) \u00f7 (Total Assets – Current Liabilities)<\/strong><\/p>\n 0.12 = CN\u00a511b \u00f7 (CN\u00a5108b – CN\u00a516b) (Based on the trailing twelve months to June 2025)<\/em>.<\/p>\n So, Tencent Music Entertainment Group has an ROCE of 12%. <\/strong> In absolute terms, that’s a satisfactory return, but compared to the Entertainment industry average of 8.1% it’s much better.<\/p>\n Check out our latest analysis for Tencent Music Entertainment Group <\/a><\/span><\/p>\n In the above chart we have measured Tencent Music Entertainment 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<\/strong> analyst report for Tencent Music Entertainment Group <\/a>.<\/p>\n Tencent Music Entertainment Group is displaying some positive trends. Over the last five years, returns on capital employed have risen substantially to 12%. Basically the business is earning more per dollar of capital invested and in addition to that, 83% 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.<\/p>\n A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that’s what Tencent Music Entertainment Group has. Since the stock has returned a solid 75% to shareholders over the last five years, it’s fair to say investors are beginning to recognize these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.<\/p>\n<\/p><\/div>\n Before jumping to any conclusions though, we need to know what value we’re getting for the current share price. That’s where you can check out our FREE intrinsic value estimation for TME <\/a> <\/strong> that compares the share price and estimated value.<\/p>\n